Rs 10 lakh cr m-cap wiped out; Sensex down 1,100 pts, Nifty at three-month low - 10 key factors behind market crash

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

• Sensex and Nifty fell over 1 percent amid FII selling and global trade tensions.
• Nifty Midcap 100 and Smallcap 100 underperformed, falling up to 3 percent.
• Rupee hit a record low of 90.97 against the US dollar due to foreign outflows.

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The equity benchmark indices Sensex and Nifty extended losses on Tuesday and settled over 1 percent lower amid sustained FII selling pressure, mixed quarterly earnings and concerns over global trade tensions.

Extending its previous day's decline, the Sensex tumbled 1,065.71 points, or 1.28 percent to settle at 82,180.47. During the day, it dropped 1,235.6 points, or 1.48 percent to 82,010.58.

The Nifty tanked 353 points, or 1.38 percent to end at 25,232.50, marking its steepest single day decline since April 7, 2025. The sharp fall dragged the index to its lowest closing level since October 15, 2025.

Bajaj Finance, ETERNAL and Bajaj Finserv were among the key laggards in the Nifty50 pack, declining up to 2 percent, while NTPC and Hindustan Unilever, rose up to 1 percent. Market breadth was negative as about 818 shares advanced, 3031 shares declined and 129 shares unchanged.

The broader markets also extended their losses in Tuesday’s session, mirroring the decline in the benchmark indices, Sensex and Nifty.

The Nifty Midcap 100 and Nifty Smallcap 100 underperformed the frontline indices, falling by up to 3 percent, while the benchmark Sensex and Nifty also traded lower.

The Nifty Midcap 100 slipped below its 100-day moving average (DMA) to 57,898.65 during intraday trade, with Oberoi Realty emerging as the biggest laggard. The Nifty Smallcap 100 index extended its losing streak for a third consecutive session, falling over 3 percent during the period.

Newgen Software Technologies, Data Patterns (India), Ola Electric Mobility and Aditya Birla Real Estate emerged as major laggards in the index, with their shares declining by as much as 12 percent.

Key factors behind market decline

1) Trade-war concerns: Trade-war concerns resurfaced after renewed uncertainty over US tariff policies, which weighed on global risk appetite. Rising US Treasury yields and fears of escalation in trade tensions between the US and Europe triggered selling in global markets, spilling over to Indian equities.

Vinod Nair, Head of Research at Geojit Investments, noted "Domestic markets remained cautious ahead of the U.S. Supreme Court’s ruling on Trump-era tariffs, with renewed uncertainty over U.S. trade policy prolonging the recent consolidation. Continued FII outflows, rising U.S. and Japanese bond yields, and a weakening rupee weighed on investor confidence."

2) FII selling: Persistent selling by foreign institutional investors (FIIs) also dragged the market. FIIs sold equities worth Rs 3,262.82 crore on Monday, marking the 10th consecutive session of net outflows this month, barring a marginal buying on January 2. Continued foreign selling has added pressure on frontline indices and limited buying interest.

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3) Mixed Q3 earnings: Earnings-related cues remained mixed. Wipro Ltd shares fell sharply on Monday after the IT major issued weaker-than-expected near-term guidance along with its December quarter results. The IT index slid 1.1% and was the top loser among major sectors.

Vishnu Kant Upadhyay, AVP - Research  Advisory, Master Capital Services Ltd., noted "the market came under pressure amid renewed trade tensions between the U.S. and Europe, rising geopolitical concerns, and weaker-than-expected Q3 earnings from a few heavyweight companies. Persistent selling by FIIs, a steep decline in the broader market, and the weekly expiry of Nifty derivatives further added to market volatility.

4) Weak global cues: Weak global cues further dampened sentiment. In Asian markets, South Korea's Kospi index, Japan's Nikkei 225 index, Shanghai's SSE Composite index and Hong Kong's Hang Seng index settled lower. Markets in Europe were trading over 1 percent lower.

US markets were closed on Monday due to a federal holiday. Wall Street futures on January 20 were trading over 1% lower.

Devarsh Vakil, Head of Prime Research at HDFC Securities, said US stock futures declined after President Donald Trump threatened fresh tariffs on NATO allies, adding to geopolitical uncertainty ahead of key corporate earnings announcements this week.

5) Decline in India Vix: Adding to caution, the India VIX, a measure of market volatility, rose over 7 percent to 12.73, indicating heightened nervousness among investors.

6) Rupee declines: The rupee depreciated 7 paise to close at a record low of 90.97 against the US dollar on Tuesday, as strong dollar demand from metal importers and persistent foreign fund outflows dented investor sentiment. Forex traders said rising geopolitical uncertainties, including renewed US expansionary signals, have increased risk aversion and kept emerging market currencies under pressure. Moreover, a sluggish domestic stock market triggered by an exodus of foreign capital further weighed on the local unit, they said. At the interbank foreign exchange, the rupee opened at 90.91 and lost ground, touched an intraday low of 91.06, and finally ended the day at an all-time low of 90.97 against the American currency.

Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, said "Rupee traded flat near 90.90 as geopolitical tensions among NATO members and uncertainty around US interests in Greenland, driven by its rare-earth resources, kept market sentiment cautious. The currency remains range-bound with participants awaiting fresh triggers from the Union Budget due on 1Feb26, while the US Fed’s policy decision later this month is expected to add volatility. The rupee is likely to trade between 90.45 and 91.45 in the near term."

7) US SC decision on Trump tariffs: Investors are also awaiting a likely US Supreme Court decision on Trump-era tariffs. Vijayakumar said an adverse ruling could alter market dynamics sharply, though the timing and outcome remain uncertain.

8) Crude rises: Brent crude oil prices edged higher by 0.11 percent to USD 64.01 per barrel. Rising crude prices tend to raise concerns over inflation and fiscal pressures for India.

9) Nifty expiry: Markets also remained volatile as Tuesday marks the Nifty weekly expiry. Expiry-day trading typically sees higher volatility due to the unwinding and rollover of derivative positions, leading to sharp intraday movements in index levels.

10) Decline in PSU Bank index: The PSU bank index declined more than 1 percent amid broad-based selling. Central Bank of India and Punjab & Sind Bank were among the key laggards, declining up to 3 percent.

Technical analysis

Rupak De, Senior Technical Analyst at LKP Securities, said "Bears resumed control as bulls were increasingly marginalised amid ongoing transatlantic trade tensions. Supports looked fragile as the Nifty kept breaking them on the back of strong institutional selling. Indicators remained in a bearish crossover and are approaching the oversold zone. On the daily chart, the index appears to be drifting towards the 200-DMA. Immediate support is seen around 25,100–25,150. If this level holds, a decent pullback can be expected."

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