Indian equity markets ended in the red on Monday, January 19, as concerns over a potential global trade war weighed on investor sentiment. The benchmark indices declined amid weak global cues triggered by US President Donald Trump's tariff announcement targeting eight European nations.

Market Performance Overview

The domestic markets witnessed broad-based selling pressure with key indices closing lower:

The market sell-off resulted in significant wealth erosion, with the overall market capitalization of BSE-listed firms dropping to ₹466.00 lakh crore from ₹468.00 lakh crore in the previous session, making investors poorer by ₹2.00 lakh crore in a single day.

Key Market Drivers

Trump's tariff threat against eight European nations, effective from February 1, over Greenland and the European Nations' reaction indicating retaliatory measures raised concerns about a potential trade war. This development sparked fears of disrupted economic growth, increased inflationary pressure, and eroded corporate profitability.

Vinod Nair, Head of Research at Geojit Investments, noted that global risk appetite weakened after the tariff announcement, triggering a broad risk-off mood across global equity markets and prompting investors to rotate toward safe-haven assets like gold. Domestically, sentiment remains cautious amid ongoing FII outflows and mixed Q3 earnings performance.

Stock Performance and Sectoral Movement

Among Nifty 50 constituents, the top performers included:

• InterGlobe Aviation (IndiGo): +4.16%
• Tech Mahindra: +2.39%
• Hindustan Unilever: +2.29%

The major laggards were:

• Wipro: -8.21%
• Reliance Industries: -3.07%
• Eternal: -2.87%

As many as 31 stocks ended lower in the Nifty 50 index. Sectoral performance showed mixed trends:

The volatility index Nifty VIX jumped 4.00%, reflecting increased market uncertainty.

Market Breadth and Activity

The advance-decline ratio remained heavily in favor of decliners, with over 3,000 stocks declining while approximately 1,200 advanced on the BSE. In terms of trading volume, Bharat Coking Coal (73.80 crore shares), Vodafone Idea (56.40 crore shares), and Tata Silver Exchange Traded Fund (35.60 crore shares) were the most active counters on the NSE.

Notably, 97 stocks including Tech Mahindra, PNB, LTIMindtree, Federal Bank, Canara Bank, AXIS Bank, and Vedanta hit their 52-week highs. However, 438 stocks including ITC, Dixon Technologies (India), Indian Hotels Company, IRCTC, and L&T Technology Services touched their 52-week lows. Eight stocks, including Jindal Saw, Alacrity Securities, and AMD Industries, jumped more than 15.00% on the BSE.

Technical Outlook

Shrikant Chouhan, Head of Equity Research at Kotak Securities, indicated that the current market texture is weak, with a fresh selloff possible only if 25,500 is dismissed. Below 25,500, the market could slip to 25,400-25,350 levels. On the upside, above 25,650, a pullback move could extend to 25,750-25,800.

Ajit Mishra, SVP-Research at Religare Broking, noted that Nifty's break below the key support zone near 25,600 signals continuation of the near-term corrective trend, with next support around 25,300-25,400 range. In case of a rebound, the 25,600 level followed by the 25,800 zone is likely to act as strong resistance.

Indian equity markets are poised for another weak session as investors continue to grapple with disappointing third-quarter earnings from major companies and escalating global trade tensions. Market indicators suggest further declines ahead, with analysts expecting sustained pressure on benchmark indices amid mixed corporate results and persistent foreign fund outflows.

Market Outlook and Early Indicators

Gift Nifty indicates that the Nifty could lose approximately 150 points at the opening on Monday, reflecting continued negative sentiment despite the weekend break. Domestic markets are likely to maintain their negative bias as geopolitical tensions continue to escalate and key index heavyweights report below-expectation quarterly results.

Previous session data showed the BSE Sensex declining 300 points to 83,270.65, while the NSE Nifty 50 dropped below the crucial 25,600 level to close at 25,585.60.

Corporate Earnings Disappointment

The market sentiment has been significantly impacted by underwhelming third-quarter results from three key index constituents. Reliance Industries, HDFC Bank, and ICICI Bank have all delivered results below market expectations, contributing to the overall pessimistic outlook.

Analysts expect the market to remain under pressure as participants digest these results and their implications for broader sectoral performance. The underperformance has been particularly pronounced in banking and conglomerate stocks.

Foreign Investment Outflows

Foreign Portfolio Investors have maintained consistent selling pressure throughout January, with total outflows reaching ₹22,529 crore up to January 16. This sustained selling has been a major drag on small and mid-cap stocks, with FIIs being net sellers on all days except one during the month.

The underperformance of India compared to other major markets has continued into 2026, with elevated valuations and poor earnings growth being the principal reasons for this tepid performance.

Analyst Perspectives and Market Drivers

Market experts highlight multiple factors contributing to the current weakness. "Volatility is likely to stay elevated as Q3 earnings announcements coincide with global macro and geo-political headlines," said Ponmudi R, CEO of Enrich Money. While steady DII inflows could cushion declines, the near-term direction remains highly sensitive to FII flows and external cues.

The upcoming week is expected to be data-heavy and crucial for short-term market direction, with participants focusing on earnings from key heavyweights and various economic indicators including PMI readings and banking sector data.

Global Context and Future Outlook

Geopolitical developments and trade negotiation updates continue to influence market sentiment, with US macroeconomic data and currency movements adding to the complexity. Despite current challenges, HDFC MF's Yearbook 2026 suggests that the year could shape up as favorable for India, with strong growth prospects and easing global risks potentially creating opportunities in metals, BFSI, capital goods, and defense sectors.