Rs 8 lakh cr m-cap wiped out! Sensex, Nifty close 1% lower: US tariff concerns among key factors behind market decline

Broader markets fall

• Sensex and Nifty fell for the fourth straight session amid high volatility
• FII selling, weak global cues, and rising crude prices weighed on markets
• US-India trade deal uncertainty and tariff concerns added to market pressure

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The benchmark equity indices Sensex and Nifty extended losses for the fourth straight session amid broad-based selling pressure on Thursday after US President Donald Trump  approved a sanctions bill that could impose 500 percent tariffs on countries buying Russian oil, impacting countries like India and China. Unabated selling by foreign institutional investors (FIIs) also dented the sentiment.

The BSE listed companies erased market cap of more than Rs 8 lakh crore on Thursday. Both benchmarks logged their biggest single-day drop since August 26, 2025.

The Sensex tanked 780.18 points, or 0.92 percent to settle at 84,180.96. During the day, it plummeted 851.04 points, or 1 percent to 84,110.10.

The Nifty tumbled 263.90 points or 1.01 per cent to close below the 50 EMA at 25,876.85 for the first time in three months, signifying a bearish shift in the trend, said analysts.

The Nifty 50 index has fallen 1.7 percent over the last four sessions, while the Sensex has lost 1.8 percent.

Tata Consultancy Services, Hindalco Industries, JSW Steel were among the major laggards in the Nifty50 pack, declining up to 2 percent, while ETERNAL and Adani Ports and Special Economic Zone were among the major gainers, rising up to 1 percent. Market breadth remained negative as about 970 shares advanced, 3048 shares declined and 154 shares unchanged.

Key factors behind market decline

1) FII selling: Foreign institutional investors offloaded equities worth Rs 1,527.71 crore on Wednesday, marking the third straight session of selling after a brief pause on January 2, when they were marginal buyers worth Rs 289.80 crore. FIIs have sold shares worth about Rs 5,760 crore so far in January, following record outflows in 2025.

2) Weekly expiry: Thursday is the weekly expiry day for Sensex derivatives. On expiry days, traders unwind or roll over positions, leading to higher trading volumes and increased volatility in the market.

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3) Weak global cues: Asian markets were trading lower, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng quoting in the red. US markets ended mostly lower on Wednesday.

"Geopolitics and global trade have cast a shadow of chronic risk aversion for equity markets," analysts led by Abhishek Saraf of Motilal Oswal Financial Services told Reuters, adding that the conclusion of the long-pending India-US bilateral trade deal would be a key catalyst for an upside move.

4) Crude oil prices: Brent crude, the global oil benchmark, rose 0.4 percent to USD 60.20 per barrel. Rising crude prices are negative for India as the country imports most of its oil requirements.

5) Trade deal concerns: US President Donald Trump has "greenlit" a sanctions bill that could impose 500 percent tariffs on countries buying Russian oil. "This bill would give President Trump tremendous leverage against countries like China, India and Brazil to incentivise them to stop buying the cheap Russian oil that provides the financing for Putin’s bloodbath against Ukraine," said Senator Lindsey Graham. The US has already imposed tariffs of up to 50 percent on certain Indian goods.

"The much-awaited US-India trade deal, which is critical for India’s sustained growth and macro-economic stability, is not happening. This and the continuing FII selling are impacting the market," VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

Up to 500% tariffs on India, China? Trump backs Russia sanctions bill

6) Rise in India Vix: The fear gauge or the India Vix rose nearly 9 percent to 10.83 level, indicating high uncertainty among the investors.

7) Selling in metal shares: Shares of metal companies declined for the second consecutive session after a six-day rally. Copper, aluminium, gold and silver saw a massive surge recently, before beginning to decline as investors may have resorted to profit booking at elevated levels.

Technical outlook

Rupak De, Senior Technical Analyst at LKP Securities, said "The Nifty has slipped below its rising trendline, clearly indicating a sudden increase in bearish bets. Additionally, the index has moved below 26,000, which had been acting as a psychological support."

"A rising India VIX is also pointing to increased panic among market participants. Overall, the setup looks uncomfortable for the bulls. Selling pressure is likely to persist in the near term unless the Nifty moves back above 26,000. On the downside, the index might fall down towards 25,700 and 25,550," he added.

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