The Nifty closed the day down 1%, slipping below the 25,900 mark in what analysts described as a technically significant move. SBI Securities said the index broke down from its rising channel on the daily chart and, more importantly, ended below its 50-day exponential moving average for the first time since early October.
That level had previously acted as strong support on three separate occasions, making the breach a clear negative signal for short-term momentum. Technical indicators echoed the weakness, with the daily relative strength index also slipping below its rising channel, reinforcing the bearish undertone.
Market breadth deteriorated sharply as selling pressure broadened across sectors. As many as 45 of the Nifty’s 50 constituents ended the session in the red. Hindalco Industries and Wipro emerged as the biggest losers among frontline stocks, while Eternal and SBI Life Insurance managed to close higher, offering limited support to the indices.
Sectorally, losses were widespread, with all major indices ending lower. Metal, oil and gas, and PSU bank stocks were among the worst hit, reflecting broad-based risk aversion rather than stock-specific triggers.
The correction was even more severe in the broader market. The Nifty Midcap 100 and Nifty Smallcap 100 both fell close to 2%, underperforming the benchmark indices. The midcap index slipped below its 20-day EMA, while the smallcap index breached all its key moving averages, a sign that sentiment in the broader market has weakened materially.
The immediate trigger for the sell-off came from fresh geopolitical developments in the US. American Senator Lindsey Graham said that US President Donald Trump had approved a bipartisan Russia sanctions bill that could sharply raise duties on Russian imports into the United States to at least 500% of their value.The proposed legislation could also be used as leverage against countries such as India, China and Brazil that continue to buy Russian oil. Graham indicated that the bill could be put to a bipartisan vote as early as next week and expressed confidence in strong cross-party support.
Trump has also warned of higher tariffs on Indian goods if New Delhi does not address US concerns related to Russian crude imports. Currently, the US has already imposed tariffs of up to 50% on certain Indian products, with roughly half of that linked directly to India’s oil purchases from Russia. These comments revived fears of trade-related disruptions just as markets were stabilising near record highs.
Foreign investor selling has continued in the new year as well, with over Rs 1,600 crore of outflows already recorded, further pressuring the markets.
Should investors buy the dip?
Vinod Nair, Head of Research at Geojit Investments, said that finalising a trade deal with the US remains crucial for India’s market performance. He noted that investors had been expecting tariffs to be capped at 25% from the current 50% and for a broader agreement to follow.
However, he cautioned that persistent negative rhetoric from Trump could weigh on market sentiment. Nair added that while exports have so far shown resilience, prolonged uncertainty could hurt India’s future export outlook.
Analysts, however, said India’s first advance FY26 GDP estimate points to robust growth driven by a rebound in manufacturing and resilient services, offering some support amid external headwinds.
From a technical perspective, Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said the Nifty has crucial support in the 25,750–25,700 zone. “A sustained move below 25,700 could open the door for a deeper correction towards 25,550. On the upside, the 26,000–26,030 range is expected to act as an immediate hurdle.”
“A sustained close below 25,900 increases the probability of further downside towards the 25,800–25,700 zone, while a recovery above 26,000 is essential to stabilise near-term sentiment. Despite the current correction, the broader weekly and monthly trend structure remains positive, although short-term corrective pressure may persist if key supports fail to hold,” said Ponmudi R, CEO of Enrich Money, a Sebi-registered online trading and wealth tech firm.
For investors, the key question now is whether this decline represents a healthy correction after record highs or the start of a more prolonged phase of volatility. Analysts suggest that while long-term fundamentals remain intact, near-term caution is warranted as markets grapple with geopolitical risks, tariff uncertainty and earnings-related triggers.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)