Indian Stock Market Slides for Second Day as Sensex Drops 1,000 Points; Investors Lose ₹10 Lakh Crore
The Indian stock market remained under pressure for the second consecutive session on Tuesday, January 20, as weak global cues, trade war concerns, and muted Q3 earnings dampened investor sentiment.
In two trading sessions, the benchmark Sensex has declined by over 1,000 points, or more than 1%, while the Nifty 50 has also fallen by over a per cent. The sharp sell-off has wiped out nearly ₹10 lakh crore in investor wealth during this period.
On Tuesday, the Sensex fell more than 650 points, or 0.80%, to hit an intraday low of 82,568. The Nifty 50 breached the 25,400 mark, slipping to an intraday low of 25,350. Broader markets underperformed, with the BSE Midcap and Smallcap indices plunging over 2% each.
As a result of the sell-off, the total market capitalisation of BSE-listed companies declined to around ₹458 lakh crore, from nearly ₹468 lakh crore recorded on Friday.
Why Is the Indian Stock Market Falling?
Market experts attribute the ongoing decline to a combination of global and domestic factors. Here are the five key reasons behind the current market weakness:
1. Trade War Fears Intensify
Investor concerns have risen amid escalating geopolitical tensions after US President Donald Trump signalled a tough stance on Greenland and threatened tariffs on several European countries opposing the move.
According to reports, the European Union is considering retaliatory tariffs on US goods worth $108 billion if the US imposes a 10% levy starting February 1. Analysts warn that continued uncertainty around US-Europe trade relations could keep markets volatile in the near term.
2. Mixed Q3 Earnings Season
Corporate earnings for the December quarter have been mixed so far, partly due to one-time impacts from new labour codes. While earnings have largely met expectations, the lack of strong positive surprises has failed to lift market sentiment already impacted by global concerns.
Experts believe earnings growth could improve as more results, particularly from the auto sector, are announced in the coming weeks.
3. Heavy Selling by Foreign Investors
Foreign institutional investors (FIIs) have continued to offload Indian equities aggressively. So far in January, FIIs have sold shares worth over ₹29,000 crore in the cash segment.
Persistent uncertainty over an India-US trade deal, the rupee’s weakness against the US dollar, and stretched valuations compared to earnings growth are key factors behind sustained foreign selling pressure.
4. Shift Toward Safe-Haven Assets
Rising geopolitical and economic risks have prompted investors to reduce exposure to equities and move funds into safe-haven assets such as gold and silver.
Precious metals have seen strong rallies in recent sessions, encouraging profit-booking in equities as investors seek stability amid ongoing global uncertainties and expectations of US Federal Reserve rate cuts.
5. Cautious Sentiment Ahead of Union Budget 2026
Investor sentiment remains guarded ahead of the Union Budget scheduled for February 1. Market participants are closely watching for policy measures aimed at boosting economic growth, employment, and consumer demand.
While the government is expected to strike a balance between growth and fiscal discipline, concerns that a stronger focus on fiscal consolidation could lead to reduced capital expenditure are keeping investors cautious.
0 Comments