Indian equities have taken a sharp tumble this January, with the Nifty 50 index dropping below 25,500 and the Sensex losing a staggering 2,900 points over the last six trading sessions. The carnage has erased more than ₹18 lakh crore from the market capitalisation of BSE-listed firms, shrinking the total from just over ₹481 lakh crore on January 2 to around ₹463 lakh crore now.
Foreign Outflows and Global Turmoil
Much of the blame for this sell-off lies with foreign institutional investors, who have been steadily pulling money out of Indian stocks since July last year. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed to a mix of factors: “growth-valuation mismatch, rupee weakness, and US tariffs on India” have all contributed. The rupee’s struggles and policy unpredictability in the US have only made things worse. Meanwhile, the India VIX—often dubbed the “fear gauge”—has spiked, signaling more volatility ahead.
The situation isn’t unique to India. US indices like the Dow, S&P 500, and Nasdaq have also crashed, rattled by worries over a probe into Federal Reserve Chair Jerome Powell and the ongoing public spat between him and Donald Trump. The political heat—especially Trump’s repeated attacks on the Fed and threats regarding US-India tariffs—has cast a long shadow over global markets.
Trade Talks, Earnings Season, and What’s Next
Market watchers say much now depends on the outcome of US-India trade negotiations and the upcoming Q3 earnings season. There was a brief flicker of optimism when the US ambassador signaled a possible resumption of trade talks, but sentiment remains fragile. “This unprecedented, unstable and unpredictable behaviour of the US president will continue to weigh on markets,” Vijayakumar warned.
Adding to the uncertainty are geopolitical flashpoints in Venezuela and Iran, as well as unresolved issues like the Supreme Court’s pending ruling on Trump-era tariffs. Domestically, heavyweight stocks in banking and IT—like Reliance Industries—are in focus, with analysts expecting Q3 results to dictate the next move.
For now, Indian markets look set to remain range-bound. With investors in a risk-off mood and fresh global shocks always a possibility, it’s a wait-and-watch game—one with potentially high stakes for portfolios across the country.
