Indian equity markets extended their decline for a fifth consecutive session on Friday, with benchmark indices facing mounting pressure from trade concerns and sustained foreign selling. The BSE Sensex and NSE Nifty 50 have witnessed significant erosion in value, wiping out substantial market capitalisation as investor sentiment remains fragile.
Market Performance Overview
The market correction has been substantial across both major indices. The following table summarises the key performance metrics:
| Parameter: |
Details |
| Sensex decline (5 days): |
2,181.71 points |
| Sensex range: |
From 85,762.01 (Jan 2 close) to 83,580.30 (Friday intraday low) |
| Nifty 50 decline (5 days): |
2.5% |
| Market cap erosion: |
₹6.8 lakh crore |
| Current BSE market cap: |
₹468.97 lakh crore |
By 12:40 PM on Friday, the Sensex was trading at 83,573.67, down 607 points or 0.72%, while the Nifty fell 187 points or 0.72% to 25,689.90.
Trump Tariff Concerns Weigh on Sentiment
Trade tensions between India and the United States have emerged as a primary concern for market participants. President Trump has indicated potential tariff increases on Indian goods, citing India's purchases of Russian crude oil as a key factor in the strained trade relationship.
The Trump administration has already imposed substantial tariffs on India:
| Tariff Details: |
Impact |
| Current tariffs on India: |
50% (among highest globally) |
| Russian oil-linked tariffs: |
25% |
| Potential additional tariffs: |
Up to 500% under Russia Sanctioning Act |
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that markets are focused on the expected US Supreme Court verdict on Trump tariff legality. "There is a high probability of the verdict going against Trump. If the Supreme Court declares Trump tariffs illegal, there would be a rally in India since India has been the worst affected by the 50% tariffs," Vijayakumar stated.
The bilateral trade agreement between India and the US remains unresolved despite six rounds of negotiations since March. US Commerce Secretary Howard Lutnick claimed the deal stalled due to communication issues between the leadership of both countries.
Persistent Foreign Institutional Investor Selling
Foreign institutional investors have maintained their selling pressure on Indian equities, contributing significantly to the market decline. On Thursday, January 8, FIIs offloaded Indian equities worth ₹3,367.12 crore, marking the fourth consecutive session of selling after a brief pause on January 2.
This sustained capital withdrawal has amplified the benchmark indices' declines and reinforced investor caution during an already challenging period for markets.
Global Market Weakness Adds Pressure
International market sentiment has remained subdued, adding to the cautious tone in Indian equities. Asian markets showed mixed performance as investors awaited key US economic data and the Supreme Court ruling on tariff legality.
| Global Market Performance: |
Movement |
| MSCI Asia-Pacific (ex-Japan): |
-0.3% |
| Japan Nikkei: |
+0.8% |
| European stock futures: |
+0.4% |
| S&P 500: |
Flat |
The uncertainty surrounding global trade policies and their potential impact on emerging markets like India continues to influence investor decision-making.
Investment Strategy Amid Correction
Despite the broad-based selloff, market experts suggest selective opportunities may be emerging. Vijayakumar highlighted that segments such as financials, consumer discretionary, and industrials, which have corrected due to overall market weakness rather than fundamental issues, could present accumulation opportunities for long-term investors.
The market's reaction to the anticipated US Supreme Court ruling on tariff legality is expected to provide direction for near-term trading sessions, with the potential for significant volatility depending on the verdict's scope and implications.
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