Sensex falls 700 pts, Nifty below 22,900 ahead of FOMC meet, Budget 2025; Rs 8 lakh crore m-cap wiped out

Two major events—India's Union Budget (February 1) and the U.S. Federal Reserve's rate decision (January 29)—are set to shape market direction in this six-day trading week.

Indian equity markets extended losses by noon on January 27, with the Nifty plunging below the crucial 22,900 mark for the first time since June 7, 2024, as investor fears over a prolonged corporate profit slowdown materialised. Negative global cues, uncertainty surrounding U.S. trade policy, and relentless foreign outflows added to the bearish sentiment. The market capitalisation erosion amounted to Rs 8 lakh crore.

The broader market bore the brunt of the sell-off, with the BSE Midcap tumbling nearly 3 percent and the BSE Smallcap index plummeting up to 4 percent. All 13 major sectoral indices traded in the red, with Nifty Energy, IT, Metal, Media, and Pharma leading declines, each shedding 2-3 percent.

At 11:35 AM, the Sensex was down 690 points or 0.9 percent at 75,500, and the Nifty was down 220 points or 0.9 percent at 22,872. About 387 shares advanced, 3,151 shares declined, and 104 shares remained unchanged.

Despite domestic institutional investors (DIIs) pumping in Rs 67,000 crore into Indian equities so far this month, relentless selling by foreign portfolio investors (FPIs)—to the tune of Rs 69,000 crore—has kept the market under pressure.

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Adding to the anxiety, U.S. President Donald Trump's renewed threats of a 25 percent tariff on Colombia for refusing to accept deported illegal immigrants, alongside potential tariffs on Canada and Mexico from February 1, have amplified market jitters.

"Will Trump walk his talk on other threats including tariffs on China and other countries, is a question that is being asked in economic and market circles now. These concerns are weighing on the markets," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Two major events—India's Union Budget (February 1) and the U.S. Federal Reserve's rate decision (January 29)—are set to shape market direction in this six-day trading week.

"The market is looking forward to fiscal stimulus through income tax cuts in the Budget. If the expectations are met, there can be a relief rally in the market. But if a rally is to sustain, we need data indicating growth and earnings revival," Vijayakumar added.

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When it comes to stock-specific action, IDFC First Bank slumped 6.7 percent to a 21-month low after its quarterly profit halved due to rising microfinance loan defaults. AU Small Finance Bank dropped 7 percent after trimming its FY25 loan growth forecast.

JSW Steel declined 2  percent as lower prices and cooling demand dragged its quarterly profits below estimates.
Godrej Consumer shed 2 percent after missing profit expectations amid slowing urban demand.

ICICI Bank, however, bucked the trend, rising 1.8 percent after posting robust profit growth driven by healthy loan performance, helping mitigate benchmark losses.

Among Nifty 50 constituents, Power Grid, HCLTech, Wipro, Tech Mahindra, and IndusInd Bank were the biggest laggards, slipping 2-4 percent. On the flip side, Britannia, ICICI Bank, HUL, SBI, and Asian Paints emerged as top gainers, rising 0.5-2 percent.

Sameet Chavan, Head of Technical and Derivative Research at Angel One said that on the weekly chart, Nifty 50 has been forming a 'Falling Wedge' pattern since September, with key support around 22,900-22,800. He said that this zone could offer strong support for bulls during this week. "However, if the event fails to inspire confidence amid volatility, we may see the sell-off extend, with the next support level around 22,500," he added.

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