Indian Stock Market Loses ₹7.60 Lakh Crore in Worst Calendar Year Start Since Decade
Indian stock market faces worst calendar year start in decade with ₹7.60 lakh crore market cap loss and 2% decline in Sensex and Nifty. FIIs maintain 92% short position in index futures while withdrawing $2 billion amid India-US tariff deal uncertainty. Technical analysis shows Nifty consolidating between 25,473-25,900 levels with key support at 25,600-25,500 range.
*this image is generated using AI for illustrative purposes only.
The Indian stock market has witnessed its most challenging start to a calendar year in over a decade, with market participants grappling with significant outflows and policy uncertainty. In the opening trading sessions of 2026, the markets have experienced substantial selling pressure, resulting in considerable erosion of investor wealth. The benchmark indices have struggled to find direction amid a confluence of domestic and international factors weighing on sentiment.
Market Performance and Capitalisation Impact
The scale of the market decline has been substantial, affecting the overall valuation of Indian equities. The performance metrics highlight the severity of the current market stress.
| Parameter: | Current Status |
|---|---|
| Market Cap Loss: | ₹7.60 lakh crore |
| Current Total Market Cap: | ₹468 lakh crore |
| Sensex Decline: | Approximately 2% |
| Nifty Decline: | Approximately 2% |
| Period: | First few trading days of 2026 |
Foreign Investment Flows and Market Positioning
Foreign institutional investors have adopted an increasingly bearish stance on Indian markets, significantly impacting market dynamics. The FII positioning reflects deep concerns about near-term market prospects and policy developments.
| Metric: | Details |
|---|---|
| FII Index Futures Position: | 92% short |
| FII Outflows: | $2 billion |
| Primary Concern: | India-US tariff deal delays |
Chakri Lokapriya, CIO-Equities at LGT Wealth, explained the market sentiment: "The market is kind of waiting for that one word called tariff. Until there is a kind of resolution, we are going to be range-bound because that creates a lot of uncertainty." Negotiations are expected to restart this week, though this development has provided only limited relief to market participants.
Technical Analysis and Trading Ranges
From a technical perspective, the benchmark indices are displaying limited conviction and have entered defined trading ranges. Market analysts are closely monitoring key support and resistance levels to gauge future directional moves.
| Technical Level: | Nifty Points |
|---|---|
| Consolidation Range: | 25,473 - 25,900 |
| Key Support: | 25,600 - 25,500 |
| Resistance Level: | 25,835 |
Rupak De, Senior Technical Analyst at LKP Securities, provided his assessment: "In the short term, sentiment is likely to remain weak with potential for further downside. Support is placed at 25,600, below which a deeper correction may unfold. On the higher end, resistance is placed at 25,835."
Market Outlook and Investment Strategy
Fund managers and market experts are maintaining a cautious stance while acknowledging potential opportunities for long-term investors. The current market environment is characterised by multiple uncertainties that are likely to persist in the near term.
Harsha Upadhyaya, CIO at Kotak Mahindra AMC, noted: "While the valuations may have corrected to some extent in the largecaps and certain midcaps, at the broader end of the market, the valuations are still expensive. Until and unless there is a real pickup in earnings growth for small caps, we may not see all-around positiveness."
Arbind Maheshwari, Head of India Equities at BofA Securities, outlined expectations for 2026: "In CY26, Nifty returns will likely be driven by earnings growth rather than valuation re-rating, as Nifty trades near +1SD (~21-21.5x 1Y forward PE), leaving limited scope for further expansion unless earnings accelerate sharply."
Key Market Factors
Several factors are contributing to the current market environment:
- Policy Uncertainty: Delays in India-US tariff deal negotiations
- Budget Expectations: Upcoming Union Budget in February with focus on capital expenditure
- Earnings Season: Ongoing quarterly results providing mixed signals
- Valuation Concerns: Expensive valuations in broader market segments
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, advised: "What smart investors should do in uncertain, volatile times like now is to remain invested and continue investing in fairly valued quality growth stocks for the long term."
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