Indian equity markets extended their losing streak for a third consecutive session on January 21, 2026, as sustained selling pressure amid weak global cues and geopolitical tensions pushed benchmark indices below key technical levels. The market decline was broad-based, with significant erosion in market capitalisation and the rupee hitting fresh record lows.

Market Performance Overview

The benchmark indices faced considerable pressure throughout the trading session, with both the Sensex and Nifty falling below their 200-day moving averages for the first time in eight months. The Nifty briefly dropped below the psychologically important 25,000 mark intraday for the first time since October 6, 2025, before recovering slightly due to value buying in select stocks.

Market Capitalisation Impact

The sustained selling resulted in a significant wealth erosion, with the market capitalisation of BSE-listed companies declining by nearly ₹1.45 lakh crore. The total market cap fell to ₹454.37 lakh crore from the previous session's ₹455.82 lakh crore, reflecting the broad-based nature of the market decline.

Sectoral Performance

Most sectoral indices ended in negative territory, with only metal and oil & gas sectors managing to close in the green. The banking sector was particularly affected, with private banks and PSU banks declining between 0.5-1 percent. Other major sectors including pharma, IT, and realty also witnessed similar declines.

Individual Stock Movements

Among Nifty constituents, Trent emerged as the biggest loser, declining 71.70 points to ₹3,764.40, representing a 1.87% drop. On the positive side, Eternal led the gainers with a significant jump of 13.90 points to ₹283.50, marking a 5.16% increase.

Top Gainers on Nifty:

• Eternal: +5.16%
• Max Healthcare
• InterGlobe Aviation
• Hindalco
• JSW Steel

Top Losers on Nifty:

• Trent: -1.87%
• Bharat Electronics
• ICICI Bank
• Tata Consumer
• Apollo Hospitals

Currency and Broader Market Impact

The Indian rupee faced significant pressure, touching a fresh all-time low of 91.74 per dollar during the session before closing at 91.70, compared with its previous close of 90.97. This currency weakness added to the overall market concerns.

The broader market underperformed the benchmarks significantly, with both BSE Midcap and Smallcap indices declining approximately 1 percent each. More than 900 stocks touched their 52-week lows during the session, including prominent names such as Kalyan Jewellers, Tata Chemicals, Godrej Properties, Havells India, and Dixon Technologies.

New Listing Performance

Amagi Media Labs made a weak stock market debut, listing at a 12 percent discount at ₹317 per share on the BSE compared with its IPO price of ₹361 per share. However, the stock recovered during the session to close higher at ₹348, showing some resilience despite the overall market weakness.

Indian equity markets witnessed sharp declines this week as investors adopted a cautious stance ahead of the Union Budget scheduled for February 1. The volatility has created selective opportunities across sectors, with analysts identifying specific themes that could benefit from government policy focus.

Market Performance and Volatility

The benchmark indices experienced significant pressure during the week, reflecting pre-Budget uncertainty and global risk-off sentiment.

On January 21, the Sensex plunged more than 1,056 points (nearly 1.30 percent) before experiencing sharp intraday recovery and subsequent decline. The Nifty 50 fell below the crucial 25,000 level, marking a decline of more than 775 points for the week. All major sectoral indices traded in negative territory, with consumer durables, banks, and IT leading the losses.

Budget Expectations and Policy Themes

Citi Research anticipates the Union Budget for fiscal year 2027 to maintain focus on targeted priorities while offering limited consumption support. The research house expects continued emphasis on public capital expenditure, with spending budgeted above nominal GDP growth.

Fiscal consolidation is expected to continue despite narrowing options for tax revenue increases following major cuts to corporate tax, personal income tax, and the GST regime.

Analyst Perspectives on Market Correction

Market experts attribute the current correction to external factors rather than fundamental weakness in Indian businesses. Tushar Badjate of Badjate Stock & Share emphasized that corporate balance sheets remain stable with earnings largely intact, positioning India as one of the strongest global growth stories.

The correction stems from multiple factors including global trade uncertainties, aggressive foreign institutional investor outflows, and proximity to the Union Budget. US-led trade tariff concerns and India-US trade negotiation uncertainties have added to market pressure, alongside rupee depreciation.

Sector-Specific Investment Opportunities

Analysts have identified several sectors offering attractive value propositions amid the market correction.

Defence and Infrastructure

Citi Research highlights defence as a preferred theme, naming Bharat Electronics as a top pick. The sector benefits from expected higher budget allocations driven by border security needs and indigenization efforts under Make in India initiatives.

Affordable Housing

The affordable housing segment presents opportunities with companies like Aavas Financiers and Aadhar Housing Finance positioned to benefit from continued government focus.

Traditional Defensives

FMCG, healthcare, and quality large-cap financial stocks appear attractive on current valuations. Select PSU banks also offer value opportunities for long-term investors.

Investment Strategy Recommendations

Experts recommend a disciplined approach during the current volatility phase. Rather than binary choices between defensive and cyclical stocks, the focus should be on balance sheet strength, pricing power, and cash flow durability.

Key Investment Principles:

• Avoid panic selling except in illiquid or loss-making microcap stocks
• Focus on companies with sustainable earnings and strong fundamentals
• Consider ETFs for diversified exposure during uncertain phases
• Maintain gradual accumulation strategy without leverage
• Target businesses with intact earnings visibility despite valuation corrections

Historically, pre-Budget corrections have rewarded investors who maintained discipline and focused on quality companies rather than reacting to short-term sentiment swings. The current market environment presents opportunities for value investors willing to look beyond immediate volatility toward long-term fundamentals.