Indian equity markets concluded a challenging week with their sharpest decline in four months, as widespread selling pressure swept across sectors and erased significant market value. The downturn marked an end to a two-week winning streak, reflecting growing investor caution amid domestic and global uncertainties.

Market Performance and Sectoral Impact

BSE-listed companies witnessed a massive erosion in market capitalisation, with over ₹15 lakh crore wiped off during the week. The benchmark Nifty index declined nearly 2.50% for the week, with selling pressure evident across all sectoral indices. Some sectors experienced particularly steep declines, with certain indices falling as much as 6.00% during the period.

Mutual Fund Flows Show Investor Caution

The cautious market sentiment was reflected in mutual fund investment patterns, with equity scheme inflows moderating in December. Net inflows into equity mutual fund schemes declined 6.00% month-on-month to ₹28,035 crore in December, down from ₹29,894 crore in November, according to data from the Association of Mutual Funds in India (AMFI).

The decline in inflows suggests investors are becoming more selective and cautious about valuations, particularly given the recent market volatility and global economic uncertainties.

Corporate-Specific Developments

Several individual stocks remained in focus due to company-specific developments. Indian Energy Exchange (IEX) experienced significant volatility, with the stock falling over 7.00% amid regulatory uncertainty. The Appellate Tribunal for Electricity (APTEL) scheduled the next hearing for January 19 regarding IEX's plea seeking withdrawal of the Central Electricity Regulatory Commission's July order on day-ahead market coupling.

Vodafone Idea continued to face scrutiny from analysts, with concerns extending beyond its Adjusted Gross Revenue (AGR) dues despite recent government relief measures.

US-India Trade Relations Under Spotlight

Trade tensions between India and the United States added another layer of uncertainty to market sentiment. US Commerce Secretary Howard Lutnick claimed that the stalled US-India trade deal resulted from Prime Minister Narendra Modi not calling US President Donald Trump. India rejected this characterization and reiterated its well-established position on energy sourcing policies.

The Indian government maintained its stance on energy security amid threats of 500% US tariffs on countries purchasing Russian oil. A proposed bill backed by President Trump targets India, China, and other nations with such tariffs, to which India responded by reaffirming its energy sourcing policies.

Global Economic Context

International markets also provided mixed signals, with US employment data showing softer-than-expected job creation in December. US nonfarm payrolls rose by a seasonally adjusted 50,000 in December, falling short of the Dow Jones estimate of 73,000 and below November's downwardly revised 56,000. However, the unemployment rate unexpectedly declined, presenting a mixed picture of the US labor market.

The week's developments highlight the complex interplay of domestic market dynamics, regulatory uncertainties, and geopolitical tensions that continue to influence investor sentiment in Indian equity markets.

Indian equity markets faced sustained selling pressure on Friday, January 9, 2026, as the Nifty declined 0.75% to close at 25,683 amid weak global cues and broad-based selling across sectors. The session witnessed significant divergence in institutional investor behavior, with foreign investors continuing their selling spree while domestic institutions provided crucial support to the markets.

Institutional Investment Flows

Foreign Portfolio Investors (FPIs) net sold Indian equities worth ₹3,769.00 crore during the session, while Domestic Institutional Investors (DIIs) net bought shares worth ₹5,596.00 crore. The detailed trading activity shows the scale of institutional participation during the volatile session.

For the month so far, the trend of foreign selling and domestic buying has continued, with FPIs net offloading ₹11,783.00 crore while DIIs have accumulated ₹17,902.00 crore worth of Indian equities.

Market Performance and Sectoral Impact

The Nifty experienced an initial uptick before coming under sustained selling pressure throughout the session. The decline was broad-based, with realty, financials, and auto stocks emerging as key laggards. The broader markets faced even more significant pressure, reflecting heightened risk aversion among investors.

The sharp decline in broader market indices indicates cautious participation across all market segments, with investors showing preference for defensive positioning.

Technical Analysis and Market Outlook

According to Ajit Mishra, SVP Research at Religare Broking, market sentiment remained subdued due to multiple factors including elevated geopolitical concerns and global trade-related uncertainties. The persistent foreign institutional selling and weakness across broader risk assets further compounded the negative bias in the markets.

From a technical perspective, the decline has disrupted the short-term upward movement in the Nifty, with the index now retesting its medium-term support zone near the 100 DEMA around the 25,600.00 level. Key technical levels to watch include:

• Support levels: 25,450.00 and 25,300.00 if the current support breaks
• Resistance level: 20 DEMA around 26,000.00 on the upside
• Critical support: 100 DEMA near 25,600.00

Market experts recommend a selective approach with controlled position sizing and balanced exposure in the current environment, given the ongoing volatility and mixed global cues affecting investor sentiment.