The Sensex, which touched an intraday high of 84,258.03, slipped to a low of 83,324.84. The Nifty fell from its peak of 25,899.80 to an intraday low of 25,627.40. By 1:13 PM, the Sensex was down 445 points, or 0.53%, at 83,433, while the Nifty declined 134 points, or 0.52%, to 25,656.
The market capitalisation of all BSE-listed companies dropped to Rs 466.41 lakh crore.
The day had begun on a hopeful note. Benchmarks opened modestly higher, extending a tentative rebound after snapping a five-day losing streak on Monday. Optimism around U.S. trade developments, along with steady early earnings from IT heavyweights Tata Consultancy Services and HCL Technologies, initially buoyed sentiment. But the relief rally proved fleeting.
What are the key factors behind Tuesday’s market slide?
1. Profit-taking in heavyweight stocks
Selling pressure returned to index heavyweights, dragging the benchmarks lower. Reliance Industries slipped 2% after gaining 0.5% in the previous session. The oil-to-telecom conglomerate had already lost 7.4% last week after the company said it does not expect any Russian crude oil deliveries, keeping investors cautious.
The IT pack also weighed on sentiment, with the sectoral index falling 0.4%. HCL Tech dropped 2%, while TCS edged down 0.1%. HCL Tech, despite posting a third-quarter revenue beat, narrowed its FY26 growth guidance to 4%–4.5% from 3%–5%. CLSA noted that the revised outlook indicated “a fourth-quarter sequential decline on product business seasonality,” prompting investors to lock in gains after the recent rebound.
2. Crude impact
Elevated oil prices added another layer of pressure on domestic equities, particularly given India’s status as a major crude importer. Oil markets firmed up as unrest in Iran stoked fears of supply disruptions, while former U.S. President Donald Trump warned that “any country doing business with Iran will be hit by a 25% tariff,” amplifying geopolitical uncertainty.
Crude prices extended gains on Tuesday, with concerns around Iran and potential supply disruptions outweighing expectations of higher output from Venezuela. Brent futures rose 47 cents, or 0.7%, to $64.34 a barrel by 0735 GMT, hovering near a two-month high, while U.S. West Texas Intermediate climbed 45 cents, or 0.8%, to $59.95.
Higher oil prices tend to weigh on the Indian market by worsening the country’s import bill and stoking inflation concerns, prompting investors to turn cautious.
3. FII selling
Sustained selling by foreign institutional investors continued to weigh on Indian equities, exacerbating the downturn at a time when market sentiment remains fragile. Relentless FII outflows since the start of the year have steadily drained liquidity, leaving benchmarks vulnerable to sharp intraday swings.
Foreign institutional investors sold Indian shares worth Rs 3,638 crore on Monday, Jan 12, extending their selling streak. The continued withdrawal of foreign capital has pressured benchmark indices, amplifying losses amid global uncertainty and reinforcing investor caution as markets contend with adverse external cues.
4. Rupee weakness
Weakness in the Indian rupee further dented investor sentiment, compounding the pressure from falling equities. The currency dipped on Tuesday, weighed down by tepid local stock markets and the deferral of Indian bonds’ inclusion in a flagship global index, although intervention by the Reserve Bank of India helped limit the downside.
The rupee was trading at 90.25 per dollar as of 11:00 a.m. IST, down 0.1% on the day. In the background, the dollar index was little changed at 98.9, as investors continued to fret over the independence of the U.S. Federal Reserve after the Trump administration opened a criminal investigation into Chair Jerome Powell, keeping global risk sentiment on edge.
5. Technical indicators flag fragile momentum
Technical signals suggested that while the market attempted a recovery from lower levels, the broader undertone remained fragile, keeping traders cautious. Analysts pointed to key support and resistance levels that are increasingly dictating short-term market direction amid heightened volatility.
Shrikant Chouhan, Head Equity Research, Kotak Securities noted that “after an early morning intraday sharp selloff, the market took support near 25,500/82,700 and bounced back sharply.” From the day’s lows, “the market bounced back over 300/1,200 points, which is largely positive.” Still, Chouhan cautioned that “the intraday market texture is positive, but buy on dips and sell on rallies would be the ideal strategy for day traders.” He added that 25,650/83,500 and 25,600/83,300 would act as key support zones, while 25,900–25,950/84,300–84,500 could serve as immediate resistance, warning that “below 25,600/83,300, sentiment could change.”
“The strategy should be to trade short between 25900 and 26000, with a stop loss at 26050,” Chouhan said.
Anand James, Chief Market Strategist at Geojit Investments, echoed the cautious tone. “Retracement studies see 25900 as the nearest resting point,” he said, adding that “with oscillators also appearing accommodative towards more upmove, we will go in today expecting 25900–26020.” However, he warned that “inability to float above 25775 could signal loss in upside momentum, calling for slippages to 25715–620,” noting that “a collapse beyond the same, appears less likely today.”