The BSE Sensex dropped over 500 points, to the day’s low of 83,043 in the early trade, while the NSE Nifty 50 slid over 140 points, slipping below the 25,550 mark.
From a closing high of 85,762.01 on Jan 2, the Sensex has shed more than 2,718 points, touching an intraday low of 83,043.45 on Monday. The Nifty has declined about 3% over the same period, hitting a low of 25,529.05.
The declines come on the heels of the market’s worst weekly performance in more than three months, reflecting investor unease after an anticipated U.S. Supreme Court ruling on President Donald Trump’s tariffs failed to materialise, prolonging a policy overhang.
The market capitalisation of all listed BSE companies has fallen by Rs 16.85 lakh crore in six days to Rs 464.39 lakh crore.
Here are the key factors weighing on Indian equities:
1. Trump tariffs and the murky U.S.-India trade outlook
An elusive India-U.S. trade deal is blunting optimism around the domestic earnings season, with profit-taking persisting amid uncertainty over U.S. tariff policy, analysts said.“The market has turned distinctly weak, weighed down by a series of India-specific and global geopolitical events. The drama surrounding the US-India trade deal is getting murkier with strange remarks from the US administration. This is impacting the market,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
He added that global flashpoints are compounding the unease. “Geopolitical developments in Venezuela, the crisis in Iran and Trump’s threats regarding Greenland are also being viewed by the markets with concern. This has spiked the India volatility index India VIX indicating big volatility ahead.”
According to Vijayakumar, the absence of clarity from Washington is keeping investors on edge. “An expected ruling on Trump tariffs from the US Supreme Court on Friday didn’t materialise; there is no clarity on when this will happen. Yet it can happen any time and, therefore, investors have to be watchful of the development on this front,” he said.
2. Persistent FII selling
Relentless selling by foreign investors has added to the pressure on Indian equities during the six-day decline, draining liquidity at a time when sentiment is already fragile.
Foreign institutional investors sold Indian shares worth Rs 3,769 crore on Friday, January 9, extending their selling streak to a sixth consecutive session after a brief pause on January 2. The sustained withdrawal of foreign capital has weighed heavily on benchmark indices, amplifying losses amid global uncertainty and reinforcing investor caution as markets grapple with adverse external cues.
3. Subdued global cues
Weak global signals added to the cautious mood on Dalal Street, with risk appetite dented after fresh concerns emerged around the independence of the U.S. Federal Reserve.
The U.S. equity futures slipped after Federal Reserve Chair Jerome Powell said the Trump administration had threatened him with a criminal indictment, unsettling investors. S&P 500 futures fell 0.5%, while European equity futures were down 0.1% in Asian trading.
U.S. government bonds edged higher, with benchmark 10-year Treasury futures implying a yield of about 4.15%, roughly one basis point lower than Friday’s cash close, as Fed funds futures priced in around three additional basis points of rate cuts this year. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5%, while Japanese markets were shut for a public holiday.
MORE TO COME…