Indian equity markets extended their decline for a fifth consecutive session on Friday, with benchmark indices facing mounting pressure from trade concerns and sustained foreign selling. The BSE Sensex and NSE Nifty 50 have witnessed significant erosion in value, wiping out substantial market capitalisation as investor sentiment remains fragile.

Market Performance Overview

The market correction has been substantial across both major indices. The following table summarises the key performance metrics:

By 12:40 PM on Friday, the Sensex was trading at 83,573.67, down 607 points or 0.72%, while the Nifty fell 187 points or 0.72% to 25,689.90.

Trump Tariff Concerns Weigh on Sentiment

Trade tensions between India and the United States have emerged as a primary concern for market participants. President Trump has indicated potential tariff increases on Indian goods, citing India's purchases of Russian crude oil as a key factor in the strained trade relationship.

The Trump administration has already imposed substantial tariffs on India:

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that markets are focused on the expected US Supreme Court verdict on Trump tariff legality. "There is a high probability of the verdict going against Trump. If the Supreme Court declares Trump tariffs illegal, there would be a rally in India since India has been the worst affected by the 50% tariffs," Vijayakumar stated.

The bilateral trade agreement between India and the US remains unresolved despite six rounds of negotiations since March. US Commerce Secretary Howard Lutnick claimed the deal stalled due to communication issues between the leadership of both countries.

Persistent Foreign Institutional Investor Selling

Foreign institutional investors have maintained their selling pressure on Indian equities, contributing significantly to the market decline. On Thursday, January 8, FIIs offloaded Indian equities worth ₹3,367.12 crore, marking the fourth consecutive session of selling after a brief pause on January 2.

This sustained capital withdrawal has amplified the benchmark indices' declines and reinforced investor caution during an already challenging period for markets.

Global Market Weakness Adds Pressure

International market sentiment has remained subdued, adding to the cautious tone in Indian equities. Asian markets showed mixed performance as investors awaited key US economic data and the Supreme Court ruling on tariff legality.

The uncertainty surrounding global trade policies and their potential impact on emerging markets like India continues to influence investor decision-making.

Investment Strategy Amid Correction

Despite the broad-based selloff, market experts suggest selective opportunities may be emerging. Vijayakumar highlighted that segments such as financials, consumer discretionary, and industrials, which have corrected due to overall market weakness rather than fundamental issues, could present accumulation opportunities for long-term investors.

The market's reaction to the anticipated US Supreme Court ruling on tariff legality is expected to provide direction for near-term trading sessions, with the potential for significant volatility depending on the verdict's scope and implications.

Indian equity markets faced significant selling pressure during Friday's trading session, with major benchmarks declining sharply amid concerns over a pending US court ruling on Trump's tariffs and ongoing foreign fund outflows. The cautious market sentiment reflected investor uncertainty about potential policy implications and their impact on Indian equities.

Market Performance Overview

The benchmark indices showed substantial weakness during the trading session, with both Sensex and Nifty experiencing notable declines.

During the day, the Sensex slumped nearly 700 points to the 83,700 level, while the Nifty 50 fell by 200 points to 25,734.10, reflecting broad-based selling pressure across market segments.

Expert Analysis on Tariff Impact

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, provided insights on the potential market implications of the US court ruling. He indicated a high probability of the verdict going against Trump, though emphasized that the details would be crucial - specifically whether it would result in a partial striking down of the tariffs or completely declaring them illegal.

According to Vijayakumar, if the Supreme Court declares Trump tariffs illegal, there could be a rally in Indian markets, as India has been among the worst affected by the tariffs. This potential outcome represents a key factor that market participants are closely monitoring.

Sectoral and Stock Performance

Sectoral performance was predominantly negative, with most indices trading in red territory. The realty index witnessed particularly sharp declines, falling over 2%. Only PSU Bank, IT, and oil & gas sectors managed to avoid the negative trend.

Top Nifty 50 Movers

Gainers:

• Eternal (leading gainers)
• HCL Tech
• Asian Paints
• ONGC
• BEL

Laggards:

• ICICI Bank
• Adani Enterprises
• Adani Ports
• Max Health
• Maruti Suzuki

Broader Market Activity

Market breadth indicated widespread selling pressure, with a total of 3,041 stocks traded on the NSE. Among these, 821 stocks advanced while 2,116 stocks declined, and 104 stocks remained unchanged. The market showed significant volatility, with 21 stocks hitting their 52-week high and 218 stocks touching their 52-week low.

Circuit breaker activity was notable, with 34 stocks hitting the upper circuit and 51 stocks hitting the lower circuit, indicating heightened market volatility.

Midcap and Smallcap Movements

Within the midcap segment, National Aluminium, Ashok Leyland, Indian Bank, Indus Towers, and Coromandel International gained 2-3%, while Hitachi Energy, Godrej Properties, 360 One WAM, and Waaree Energies declined 3-6%.

In the smallcap space, IEX emerged as the top loser, falling over 5% as the CERC coupling order stayed. Other notable decliners included Tejas Networks, Trident, Afcons, and JWL, which fell 3-4%. On the positive side, Star Health, Ramco Cements, GE Ship, and GRSE gained 1-2%.

On the BSE, MTAR Tech, National Aluminium, Ujjivan SFB, Ashok Leyland, and Hindustan Zinc climbed 3-6%, while Elecon, IEX, Hitachi Energy, GV TD, and Godrej Properties declined 5-15%.