Bears took control of Dalal Street as the stock market saw another session of losses as the benchmark indices extended their downward movement, with weak sentiment prevailing across sectors. Sensex fell over 800 points to hit the day’s low of 75,348.06, while Nifty fell below the 23,000 mark.
Sensex opened at 75,700.43 after having closed at 76,190.46 in the previous session.
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The S&P BSE Sensex fell 818.36 points to 75,372.10, while the NSE Nifty50 dropped by 257.35 points to 22,834.85 as of 10:35 AM. The fall was driven by several global and domestic factors that have been weighing on investor sentiment.
The weakness in the market was primarily seen in IT and metal stocks, while mid-cap and small-cap stocks also witnessed significant selling pressure. Analysts believe that a mix of global uncertainty, persistent foreign portfolio investor (FPI) selling, and domestic concerns has led to the downturn.
Foreign Portfolio Investor (FPI) selling pressures
One of the key reasons for today’s market fall is the sustained selling pressure from FPIs. In January alone, FPIs have pulled out Rs 69,000 crore from the Indian market. This continuous outflow has overshadowed the strong buying by domestic institutional investors (DIIs), who have invested Rs 67,000 crore during the same period.
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Kranthi Bathini, Equity Strategist at WealthMills Securities, said, “Nifty is trading below the crucial 23,000 level. Anything below this creates panic and leads to furious selling. Today, we are witnessing visible pressure in mid-cap and small-cap stocks. Investors are also being cautious due to the upcoming Union Budget and the Reserve Bank of India’s monetary policy decision next week.”
Global uncertainties and trade tensions
Global factors are also playing a significant role in dampening market sentiment. The US Federal Reserve is set to announce its monetary policy decision, and investors are concerned about further tightening of liquidity. Additionally, rising trade tensions have added to the uncertainty.
There are fresh fears regarding the US imposing a 25% tariff on Colombia for its refusal to accept deported illegal immigrants. Similar threats of tariffs on Canada and Mexico have heightened concerns about global trade disruptions. These issues have created volatility in economic and market circles, leading to risk aversion among investors.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “Sustained FPI selling is impacting the market. Concerns about new tariffs and global trade tensions are weighing heavily on sentiment. Markets are now looking forward to fiscal stimulus through income tax cuts in the Budget. If these expectations are not met, the market may continue to face pressure.”
Profit booking and pre-Budget nervousness
Another factor contributing to the market’s decline is profit booking by investors ahead of the Union Budget 2025. Markets are hoping for measures like income tax cuts or other fiscal stimulus to boost growth, but the uncertainty surrounding these expectations has added to the volatility.
Trivesh, COO of Tradejini, said, “The market is nervous about the global liquidity tightening and the upcoming Budget. Profit booking ahead of the Budget is creating additional pressure. Quarterly earnings have also been subdued, adding to the overall weakness. Additionally, global risk aversion has triggered capital flight, while crude oil prices remain under pressure due to concerns about slowing demand.”
The rise of China’s DeepSeek AI technology has raised fears about intensifying competition in the global technology sector. This has added to the cautious sentiment among investors, particularly in IT stocks. Crude oil prices have declined due to demand concerns tied to slowing global growth, but this has not been enough to counter the negative sentiment in equities.
The markets are expected to remain volatile in the coming days due to key global and domestic events. Investors are eagerly awaiting the Union Budget on Saturday, as well as the Reserve Bank of India’s monetary policy decision in the first week of February.
Market experts suggest that any disappointment in Budget announcements could trigger further selling, while positive measures such as tax cuts or fiscal incentives could lead to a relief rally. However, the overall sentiment is likely to remain cautious until there are clearer signs of earnings revival and economic growth.
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