Indian benchmark indices ended on a weak note with Nifty closing around 23,000 on January 21 amid selling across sectors. At the close, the Sensex was down 1,235.08 points or 1.60 percent, settling at 75,838.36, and the Nifty was down 320.10 points or 1.37 percent, closing at 23,024.65. Trent, Adani Ports, NTPC, ICICI Bank, and M&M were among the biggest losers on the Nifty, while gainers included Apollo Hospitals, BPCL, Tata Consumer, JSW Steel, and Shriram Finance.
The BSE Midcap and Smallcap indices shed 2 percent each. All the sectoral indices ended in the red, with both Consumer Durables and Realty indices plunging 4 percent each, while the bank, power, telecom, and capital goods sectors were down 2 percent each. Ajit Mishra, SVP of Research, Religare Broking, commented that the markets experienced a volatile session on Tuesday, ultimately closing with a decline of nearly 1.5%.
Despite an initial uptick, the benchmark index fluctuated significantly throughout the day before settling near its intraday low. Selling pressure was broad-based, especially in the Real Estate, Energy, and Auto sectors. The broader indices also came under significant pressure, each shedding over 2%.
This decline signals a resumption of the negative trend following a brief consolidation phase, with the Nifty index likely to move towards the 22,700 level. Persistent selling by FIIs and a lackluster start to the earnings season are key factors dampening market sentiment. Additionally, the recent uptick in the volatility index, India VIX, is contributing to the prevailing cautious outlook.
Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services, highlighted that Nifty ended 320 points lower, pressured by consistent FII selling, uncertainty around Trump’s tariff policies, and weaker-than-expected Q3 results from several companies.
Tariffs spark market volatility in India
Broader markets witnessed heavy selling pressure, with the Nifty Midcap 100 and Smallcap 100 indices shedding over 2% each.
All sectoral indices ended in the red, with Nifty Realty being the top loser, declining over 4% due to growth concerns and uncertainty regarding the start of an interest rate cut cycle by the RBI. FIIs sold equities worth 4,337 crore on Monday, leading to over 50,000 crore outflows for January to date. Trump’s remarks targeting BRICS nations and reiterating his intention to impose 100% tariffs on countries reducing their reliance on the US dollar for global trade have induced negative sentiments in the Indian market.
Global markets are also affected by the expectation of an interest rate hike by the Bank of Japan (BoJ) in its upcoming decision last Friday, which could impact borrowing costs globally. Markets are expected to remain under pressure in the near term amid mixed quarterly earnings and heavy FPI selling. Investors are closely tracking the Q3 earnings of heavyweights like HDFC Bank, HUL, and BPCL, which are set to be announced tomorrow.
Midcap IT stocks will also be focused as Coforge and Persistent Systems announce their results. Vinod Nair, Head of Research at Geojit Financial Services, remarked that domestic markets experienced a significant decline today. Heavier volatility followed Trump’s announcement of trade tariffs on neighboring countries on his inauguration day, adding uncertainty to global markets. The weak recovery in the ongoing Q3 earnings, coupled with a depreciating INR, could prompt further outflows from FIIs.
Mid- and small-cap stocks underperformed the main indices. The Real Estate sector was hit the hardest by weak pre-result updates, while banks suffered from rising asset quality stress. The Indian rupee ended flat at 86.58 per dollar on Tuesday, compared to the previous close of 86.56.