Indian benchmark indices Sensex and Nifty are expected to open with a positive bias on January 9, despite extending losses for the fourth consecutive session. The GIFT Nifty was trading higher at around 26,011 points, indicating a firm opening for domestic markets.

Market Performance on January 8

Bears maintained their grip on Dalal Street as Indian equity benchmarks faced broad-based selling pressure across sectors. The markets were weighed down by persistent foreign institutional investor outflows, concerns over potential US tariffs, and rising geopolitical tensions.

The Nifty slipped near the 25,850 mark during intraday trading, reflecting the challenging market conditions that have persisted over recent sessions.

Fund Flow Dynamics

Foreign and domestic institutional investors showed contrasting behavior on January 8, with domestic investors providing crucial support to offset foreign selling pressure.

This marked the fourth consecutive session of FII selling, while DIIs continued their supportive stance by purchasing equities worth approximately ₹3,701 crore.

Global Market Overview

Asian equities displayed mixed performance, swinging between modest gains and losses as investors positioned themselves ahead of the US payrolls report and awaited a possible Supreme Court ruling on Trump's tariffs.

Wall Street ended with mixed results on Thursday. The technology sector faced pressure with Nvidia and other tech stocks declining, while defense companies advanced following Trump's announcement of an enlarged $1.50 trillion military budget.

Currency and Commodity Movements

The US dollar strengthened at the start of the Asian session on Friday, rising for the third consecutive day. The dollar index advanced 0.20% to 98.91 as traders awaited the latest US jobs report and prepared for the Supreme Court decision on Trump's emergency tariff powers.

Most Asian currencies traded lower in early Friday trade, with the Philippines Peso leading the decline, followed by the Malaysian Ringgit and Indonesian Rupiah. The Chinese Renminbi was the exception, avoiding the broader regional weakness.

In commodities, oil prices extended gains as investors monitored developments in Venezuela and Iran, while silver fell for the second consecutive day amid positioning for annual rebalancing of commodity indexes.

Indian equity markets experienced a brutal selloff on Thursday, January 8, as geopolitical tensions and trade policy uncertainties triggered widespread panic among investors. The benchmark indices witnessed their steepest decline in months, with selling pressure intensifying across all sectors and wiping out substantial investor wealth.

Market Performance and Investor Losses

The equity markets closed on a deeply negative note, with both major indices falling below critical technical levels. The broad-based selloff resulted in significant wealth destruction for investors.

Capital Goods Sector Bears Maximum Brunt

The capital goods sector emerged as the worst performer during Thursday's session, with major companies experiencing double-digit declines. The selling pressure was particularly intense in infrastructure and engineering stocks.

For BHEL, this represented the biggest single-day drop since June 4, 2024, when the stock had declined 21% on the day of Lok Sabha election results.

Trump Administration's Trade Policy Escalation

The market crash coincided with significant developments in US trade policy that could directly impact India's energy imports and bilateral relations. American Senator Lindsey Graham confirmed that President Donald Trump has given approval to a bipartisan Russian sanctions bill.

The proposed legislation would allow the US President to impose punitive measures on countries purchasing Russian oil at discounted rates. This development has raised fresh uncertainty over global energy flows and trade relations, particularly affecting major oil importers like India and China.

US Withdrawal from International Bodies

In another significant policy shift, the Trump administration announced its exit from multiple international organizations, marking a broader retreat from global cooperation. The withdrawal includes departure from the India-led International Solar Alliance and 65 other international bodies.

The administration's decision extends to withdrawal from the UN's population agency and the UN treaty establishing international climate negotiations, signaling a comprehensive pullback from multilateral engagement.

Domestic Infrastructure and Technology Developments

Despite market turbulence, domestic infrastructure and technology initiatives continued to progress. Prime Minister Narendra Modi chaired a roundtable with leading Indian artificial intelligence start-ups, emphasizing the government's commitment to positioning India as a global hub for ethical, inclusive and affordable AI.

However, infrastructure challenges emerged as Noida International Airport nears its launch. Similar to Navi Mumbai International Airport, telecom network connectivity for passengers remains uncertain as the airport management has refused permission to telecom companies to deploy their networks.

The convergence of geopolitical tensions, trade policy uncertainties, and domestic market dynamics created a perfect storm for Indian equities, resulting in one of the most significant single-day wealth destruction events in recent months.