As the benchmark indices continued their downward trajectory and mood remained bad across all sectors, bears took control of Dalal Street and the stock market experienced yet another session of losses. While the Nifty dropped below 23,000, the Sensex dropped more than 800 points to its lowest point of the day, 75,348.06. After closing at 76,190.46 in the previous session, the Sensex began at 75,700.43.
As of 10:35 AM, the NSE Nifty50 declined 257.35 points to 22,834.85 and the S&P BSE Sensex plummeted 818.36 points to 75,372.10. Numerous domestic and international variables that have been affecting investor mood were the main causes of the decline.
Metal and IT companies were the main areas of market weakness, but there was also a lot of selling pressure on mid-cap and small-cap equities. The fall, according to analysts, has been caused by a combination of domestic worries, ongoing foreign portfolio investor (FPI) selling, and worldwide uncertainty. The persistent selling pressure from FPIs is one of the main causes of the market decline today. FPIs withdrew Rs 69,000 crore from the Indian market in January alone. The robust purchases made by domestic institutional investors (DIIs), who spent Rs 67,000 crore during the same time period, have been eclipsed by this ongoing outflow.
Kranthi Bathini, Equity Strategist at WealthMills Securities, said, “Nifty is trading below the crucial 23,000 level. Anything below this creates panic and leads to furious selling. Today, we are witnessing visible pressure in mid-cap and small-cap stocks. Investors are also being cautious due to the upcoming Union Budget and the Reserve Bank of India’s monetary policy decision next week.” Depressing market mood is also being significantly influenced by global issues. The US Federal Reserve is set to announce its monetary policy decision, and investors are concerned about further tightening of liquidity. Additionally, rising trade tensions have added to the uncertainty.
Colombia’s unwillingness to accept deported illegal immigrants has sparked new concerns about the US placing a 25% tax on the country. Concerns about interruptions to international trade have increased in response to similar tariff threats against Canada and Mexico. Investors have become risk averse as a result of the volatility these problems have caused in the market and economy. Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “Sustained FPI selling is impacting the market. Concerns about new tariffs and global trade tensions are weighing heavily on sentiment. Markets are now looking forward to fiscal stimulus through income tax cuts in the Budget. If these expectations are not met, the market may continue to face pressure.”
Profit booking by investors prior to the Union Budget 2025 is another cause causing the market to drop. Markets are expecting fiscal stimulus, such as income tax cuts, to spur growth, but the uncertainty surrounding these expectations has increased volatility. Trivesh, COO of Tradejini, said, “The market is nervous about the global liquidity tightening and the upcoming Budget. Profit booking ahead of the Budget is creating additional pressure. Quarterly earnings have also been subdued, adding to the overall weakness. Additionally, global risk aversion has triggered capital flight, while crude oil prices remain under pressure due to concerns about slowing demand.”
Concerns about escalating competitiveness in the global technology sector have been raised by the emergence of China’s DeepSeek AI technology. This has added to the cautious sentiment among investors, particularly in IT stocks. Demand worries linked to slowing global economy have caused a drop in crude oil prices, but this hasn’t been enough to offset the gloomy sentiment in stocks.
Important domestic and international events are predicted to keep the markets erratic in the days ahead. The Reserve Bank of India’s monetary policy announcement in the first week of February and the Union Budget on Saturday are both highly anticipated by investors. According to market experts, a relief rally could result from good measures like tax cuts or fiscal incentives, but further selling could be triggered by any disappointment with budget statements. However, the overall sentiment is likely to remain cautious until there are clearer signs of earnings revival and economic growth.
