The Indian stock market has experienced a significant downturn over the past two days, with the Sensex crashing over 750 points and the Nifty 50 dropping below the 25,450 mark. Several factors have contributed to this decline, creating a cautious environment for investors.

Global Trade Tensions

Renewed global trade tensions have played a significant role in the market's decline. U.S. President Donald Trump's recent threat to impose tariffs on eight European countries, including the UK, in response to Denmark's opposition to his plans to acquire Greenland, has reignited fears of a global trade war. This move has triggered a risk-off sentiment in equities worldwide, with investors seeking safe-haven assets.

Persistent FII Selling

Foreign institutional investors (FIIs) have been consistently selling Indian equities, adding to the downward pressure. This trend has persisted for over two weeks, with FIIs offloading equities worth billions of rupees. This continuous selling reflects ongoing caution amid global trade and geopolitical uncertainties. While domestic institutional investors (DIIs) have stepped in as stabilizing buyers, their inflows have not been sufficient to offset the persistent FII withdrawal.

Disappointing Earnings

Mixed Q3 earnings from major Indian companies have also contributed to the market's negative sentiment. Disappointing results from index heavyweights like Reliance Industries and ICICI Bank have particularly weighed on the benchmarks. Reliance Industries missed December-quarter profit estimates due to weakness in its retail business and higher expenses. ICICI Bank reported lower-than-expected profit after elevated provisions following a supervisory review. Wipro's subdued outlook for the March quarter further dampened the market mood.

Other Contributing Factors

• Rupee Weakness: A weakening rupee has also contributed to the market's decline.
• Global Cues: Weak global cues, including negative trends in Asian and European markets, have further exacerbated the selling pressure.

Market Performance

On January 20, 2026, the Sensex fell over 400 points in intraday trade, dropping to 82,812.32, while the Nifty 50 breached 25,450, falling to 25,432.60. The broader market also weakened, with mid-cap and small-cap indices slipping. Several sectors experienced losses, including IT, metal, pharma, oil & gas, consumer durables, and financial services.

Expert Outlook

Experts suggest that the Indian stock market is likely to remain volatile in the near term, with a consolidation phase expected in the coming sessions. The Nifty is expected to trade in the range of 25,400-26,000. A breach below 25,400 could signal a further decline. Investors are advised to remain cautious and focus on companies with strong earnings growth.