Market participants are also bracing for the US Federal Reserve’s policy decision due on Wednesday, where the central bank is widely expected to keep interest rates unchanged, adding to the cautious undertone in early trade.
Sensex tumbled over 400 points to the day’s low of 81,088, while the Nifty dropped below 25,000 level.
Among Sensex constituents, Axis Bank, UltraTech Cement, Adani Ports, BEL, Bajaj Finserv, and NTPC were among the top gainers, advancing between 1% and 3.5%. Losses were led by Kotak Mahindra Bank, M&M, Eternal, Maruti Suzuki, HDFC Bank, and Reliance Industries.
Broader markets mirrored overall trends and opened marginally lower, with mid-cap and small-cap stocks down 0.1%, each.
Kotak Mahindra Bank tanked over 4% after the private sector lender reported a 4% year-on-year (YoY) increase in its standalone net profit for the third quarter of the financial year 2025-26 (Q3FY26). The profit rose to Rs 3,446 crore, compared to Rs 3,305 crore in the same quarter a year ago.
Shares of Axis Bank were up over 3% after the private sector lender reported a 3% year-on-year (YoY) increase in standalone net profit for the third quarter of the financial year 2025-26 (Q3FY26).Expert views
V K Vijayakumar, Chief Investment Strategist at Geojit Investments said that a key concern weighing on the markets is persistent foreign institutional investor (FII) selling, which has been exacerbated by the steady depreciation of the rupee. The currency weakened to Rs 91.96 against the dollar on Friday, January 23. Market participants believe that delays in finalising a US–India trade agreement could further widen India’s trade and current account deficits, adding pressure on the rupee.
Sustained FII outflows are largely in anticipation of this continued currency weakness. In essence, a revival in FII confidence in Indian equities hinges on two conditions: first, a meaningful improvement in corporate earnings, and second, the conclusion of a US–India trade deal. While earnings recovery is expected in Q4 FY26, there is no clarity on the timeline for the trade agreement, making it the single biggest uncertainty currently weighing on market sentiment, he added.
Global Markets
US equity markets ended higher on Monday as investors kept a close watch on political developments while positioning themselves for a busy week that includes a slew of key corporate earnings and the Federal Reserve’s latest interest rate decision.
The S&P 500 rose 0.50% to close at 6,950.23, while the Dow Jones Industrial Average gained 313.69 points, or 0.64%, to settle at 49,412.40. The Nasdaq Composite advanced 0.43% to finish at 23,601.36, supported by gains of around 3%, 2% and 1% in Apple, Meta Platforms and Microsoft, respectively, ahead of their earnings announcements later in the week.
Asian shares advanced on Tuesday as investors hoped for the best from a barrage of U.S. mega-cap earnings, though uncertainty caused by President Donald Trump’s latest tariff moves on South Korea limited broader gains while boosting gold and silver.
FII/DII Tracker
On the institutional front, Foreign Institutional Investors (FIIs) sold equities worth a little over Rs 4,113 crore on January 23, while Domestic Institutional Investors (DIIs) were net buyers to the tune of Rs 4,102 crore.
Crude impact
Oil prices were mostly flat on Tuesday. Brent crude futures slipped 0.1% to $60.58 a barrel, while U.S. West Texas Intermediate crude fell 0.2% to $65.48.
Rupee vs Dollar
The Indian rupee strengthened in early trading on Tuesday. The currency rose 18 paise to 91.76 against the U.S. dollar.
The U.S. dollar index, which tracks the greenback against a basket of six major currencies, was little changed at 97.09, near a 4-1/2 month low of 96.8.
(with inputs from agencies)
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)