Sensex settles 250 pts lower, Nifty ends below 25,700: 3 key factors behind market decline

Stock market today news: Sensex, Nifty see profit booking. 

The benchmark indices Sensex and Nifty witnessed sharp volatility on Wednesday, with investors staying cautious amid persistent foreign fund outflows, weak global cues and uncertainties over US tariff policies.

The Sensex fell 244.98 points or 0.29 percent at 83,382.71, while the broader Nifty declined to 25,665.60, down 66.70 points or 0.26 percent.

Key factors behind market decline

1) Continued foreign fund outflows: Foreign institutional investors (FIIs) sold equities worth Rs 1,499.81 crore on Tuesday, according to exchange data. This marked the seventh consecutive session of net selling by FIIs in January so far.

Persistent foreign selling has added pressure on domestic equities, especially in large-cap stocks, dealers said.

2) Weak global cues: Asian markets were trading lower, with Shanghai’s SSE Composite index in the red. US markets ended lower overnight, while Wall Street futures were also trading in negative territory, indicating a weak start for US equities.

"Sentiment remains guarded amid ongoing geopolitical tensions, tariff-related uncertainties, persistent FII selling, and firmer crude prices. While select Asian markets are showing pockets of strength, global cues are mixed, with US indices ending overnight in the red," said Ponmudi R, CEO of Enrich Money.

3) Tariff-related concerns: Investor sentiment remained cautious ahead of the US Supreme Court’s likely ruling on January 14 on the legality of tariffs imposed by the Trump administration on trading partners. The tariffs, imposed last April, range from 10-50 percent on major economies and have been challenged in court on the grounds that they exceed presidential authority.

Adding to the unease, US President Donald Trump on Monday said countries doing business with Iran could face a 25 percent tariff on trade with the US, as Washington weighs its response to the situation in Iran.

Nifty outlook

According to Anand James, Chief Market Strategist at Geojit Investments, Nifty found support in the 25,715–25,620 zone, but failed to build upward momentum.

"We will look for consistent trades above 25,715 to play upswings targeting 26,020. A break below 25,600 could bring 25,060 into focus," he said.

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