Sensex declines over 500 pts from day's high, Nifty below 25,150: Trump-Powell saga among key factors behind market decline

Sensex, Nifty see profit-booking in July 17 trade. 

The benchmark indices Sensex and Nifty pared early gains and traded lower at around noon on Thursday, as investors turned cautious over uncertainty surrounding US Federal Reserve Chair Jerome Powell’s future.

Sensex opened on a firm note, rising 119.05 points to 82,753.53, while the NSE Nifty climbed 18.7 points to 25,230.75. However, both indices came under pressure later in the session, with the Sensex declining to 82,219.27 and the Nifty slipping to 25,101.00.

Following are the key factors that weighed on the markets:

1) Trump-Powell Uncertainty: Reports that US President Donald Trump may be considering the removal of Federal Reserve Chair Jerome Powell dampened investor confidence. Although Trump denied the reports, he continued to criticise Powell for not lowering interest rates. The possibility of Powell being replaced ahead of his term ending in May 2026 has raised concerns over the Fed's independence and the stability of the US financial system.

Pranay Aggarwal, Director and CEO of Stoxkart, noted "Markets are reacting to global uncertainties, especially the renewed Trump-Powell saga, which has raised concerns about U.S. Fed independence and interest rate direction. This is causing volatility across global markets and triggering short-term FII outflows from India. However, India’s strong fundamentals, including resilient demand and robust earnings, remain intact. We see this as a sentiment-driven correction, with long-term growth drivers firmly in place."

2) Weak Global Cues: US stock futures were trading lower in early India hours, suggesting a muted to weak opening for Wall Street. Global investors remained cautious, and the spillover effect was seen in the domestic markets, which often track global trends for direction.

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3) IT Earnings Disappoint: Tech Mahindra shares fell over 1 percent after the company’s June quarter earnings failed to lift investor sentiment. The IT major reported a 34 percent year-on-year rise in consolidated net profit to Rs 1,140.6 crore, driven by gains in the communications and financial services segments. However, results from major players in the sector have largely fallen short of expectations, dampening sentiment in the broader IT space.

4) Uncertainty Over India-US Trade Deal: Markets remained cautious ahead of the India-US trade deal. According to reports, Indian officials are seeking a lower tariff rate than the one agreed between the US and Indonesia. With the August 1 deadline approaching, investors are awaiting clarity on the final terms.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, "There are no clear triggers for the market to break out of the consolidation range seen over the past two months. Even the likely interim trade deal has already been factored in. Only a better-than-expected tariff rate, below 20 percent, could surprise the market positively."

5) FII Outflows: Foreign Institutional Investors (FIIs) remained net sellers, offloading equities worth Rs 1,858.15 crore on Wednesday. Selling by FIIs puts pressure on domestic equity markets and reflects risk-off sentiment.

6) Rising Crude Prices: Brent crude futures rose 0.58 percent to USD 68.92 per barrel. Higher crude prices increase import bills for oil-dependent countries like India and can lead to inflationary pressures, weighing on investor sentiment.

Technical View

Anand James, Chief Market Strategist at Geojit Financial Services, said the Nifty’s upward move paused after reaching the 25,220 mark. "The close appears more optimistic than the previous day, and there is still scope for an extended push to 25,335 or 25,420. Failure to sustain above 25,180 could lead to a sideways trend. The downside range remains around 25,120–25,090."

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