Indian equity benchmarks extended their losing streak in early trade on Monday, with both BSE Sensex and NSE Nifty falling approximately 0.5% as volatility surged and key support levels came under pressure.

Market Performance at Opening

The benchmark indices showed significant weakness during the morning session:

Market breadth deteriorated sharply, with 2,367 stocks declining against just 813 advances, while 172 shares remained unchanged. This indicates broad-based selling pressure across market segments, with midcap and smallcap stocks also slipping further.

Technical Analysis and Support Levels

The continued weakness follows last week's sharp correction and Friday's fifth consecutive session of losses. Technical analysts have identified the 25,500-25,600 band as a critical medium-term support zone for the Nifty. A sustained break below this level could open the door to deeper downside, while only a rebound above 25,800-25,850 is expected to ease near-term pressure.

Sectoral Performance

Selling pressure intensified across multiple sectors as the session progressed:

Declining Sectors:

• Realty stocks led the decline
• Media, pharma, infrastructure, and energy sectors under pressure
• Banking and IT stocks also remained weak

Individual Stock Movement:

Volatility Surge

Market volatility jumped sharply during the session, with India VIX surging over 8%. This significant increase reflects heightened nervousness among investors and increased demand for portfolio protection amid the ongoing sell-off.

Global Context and Institutional Flows

Global cues remained mixed, with US markets ending last week at record highs on expectations of rate cuts following weaker jobs data. However, Indian equities continued to lag amid concerns over potential US tariff actions and global trade uncertainty. Foreign institutional investors have remained net sellers, and despite steady domestic institutional buying, the flow imbalance has maintained pressure on equity markets. Crude oil prices remained volatile, adding another layer of market uncertainty.

Indian equity benchmarks are expected to open higher on Monday after experiencing their worst weekly performance in more than three months, with market sentiment supported by prospects of a U.S. rate cut despite ongoing concerns over trade relations and foreign fund outflows.

Market Opening Indicators

Gift Nifty futures were trading at 25,793 points as of 7:54 a.m. IST, indicating that the Nifty 50 could open above its Friday close of 25,683.30. The positive opening sentiment comes despite significant weekly losses for both major indices.

Weekly Performance and Market Concerns

Both the Nifty 50 and Sensex lost approximately 2.5% each during the previous week, closing lower in all five trading sessions. The decline was primarily attributed to renewed concerns over U.S. tariffs that rattled investor confidence. Market analysts expect volatility to remain elevated, particularly during early trading hours.

"Volatility is expected to remain elevated, particularly during early trade, with any pullback rallies likely to be short-lived," said Ponmudi R, CEO of Enrich Money.

Foreign Investment Outflows

Foreign investors continued their selling pressure, offloading Indian shares worth ₹37.69 billion (approximately $417.63 million) on Friday according to provisional data. The selling trend has intensified in January, with foreign investors having sold $1.30 billion worth of Indian equities so far this month, following record outflows in 2025.

Corporate Earnings Highlights

Several major companies reported their quarterly performance, showing mixed but generally positive results:

Avenue Supermarts, which operates the DMart retail chain, demonstrated strong growth momentum with standalone revenue increasing 13.2% and profit rising 17.6% for the third quarter. Phoenix Mills reported robust retail portfolio consumption growth of 20% in the December quarter, reflecting demand resilience even as select assets continue to undergo planned revamp.

Market Outlook and Key Factors

Asian markets provided some support by rising early in the day, tracking a Wall Street rally from Friday. The U.S. rally was triggered by December employment data showing fewer job additions than expected, which did little to alter expectations of a Federal Reserve rate cut this year. Domestic investors will focus on upcoming earnings announcements and inflation data scheduled for release later in the day for additional economic cues.

Market challenges include an elusive India-U.S. trade deal, heightened geopolitical risks, and ongoing foreign fund outflows that continue to weigh on investor sentiment.