On January 27, 2025, Indian stock markets experienced significant losses, marking the third consecutive week of declines. The BSE Sensex plummeted more than 700 points, settling at 75,426.38, and the Nifty50 fell below the 22,900 mark, trading at 22,855.20. This decline was attributed to multiple factors, including continued selloff by foreign portfolio investors (FPIs) and poor corporate performances.
Foreign institutional investors have been major contributors to the recent downturn, withdrawing substantial amounts of capital. By approximately January 24, 2025, FPIs had sold equities worth ₹64,156 crore, showcasing their growing lack of confidence in the current market conditions. With this sustained selling trend, the total market cap of BSE-listed firms diminished by ₹9.48 lakh crore, amplifying investor fears and concerns.
The broader market metrics reflect this negativity; the Nifty50 is on track to break a 23-year record with four straight months of decline. Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, articulated the underlying concerns driving market sentiment. "A major concern is President Trump introducing new threats, like the 25% tariff on Colombia for refusing to accept deported illegal immigrants. The potential tariffs on Canada and Mexico are weighing on the markets," he stated.
Investor anxiety is compounded by the muted performance during the current earnings season as Bloomberg estimates predict only 3% year-on-year growth for Nifty50 companies' earnings per share (EPS) for the third quarter. Industries such as metals and banking have particularly struggled, adding to the sense of uncertainty among investors struggling to anchor their strategies amid fluctuated market conditions.
Market analyst Akshay Chinchalkar from Axis Securities pointed out the technicals, noting, "The index has now declined for three straight weeks, the longest such streak since late October. Technically speaking, breaking above 23475 is needed for a bullish flip, but till then 22976 will remain vulnerable." This comment encapsulates the struggle of traders as they navigate the technical support and resistance levels, seeking signs of recovery.
The aftermath of Trump’s recent tariff announcements is evident. Initially, the tariffs posed significant market tension, but after Colombia's agreement to accept deported migrants, fears lingered over other potential tariffs destined for Canada and Mexico set to take effect on February 1. Such uncertainty creates ripple effects throughout global markets and has led to tightening financial conditions.
The sectors weighed down the most include the media, healthcare, and IT segments, with the Nifty Media Index dropping by over 4% and numerous individual stocks reflecting similar declines. Among the notable losers, Zomato Ltd and Power Grid Corporation of India Ltd posted significant losses at 3.38% and 2.96%, respectively.
Despite some shares showing resilience, such as ICICI Bank and Hindustan Unilever, the broader sector indices mirrored the negativity palpable across the market. The selling pressure from FPIs continues as negative sentiment prevails, leading to discussions among investors on strategies during these turbulent times—considering selective investments rather than large swathes of buying.
While the Federal Reserve’s upcoming rate decision might provide some clarity, the present outlook appears bleak. Investors await not only the decision itself but also the commentary surrounding future rate adjustments. The anticipated fiscal stance of rates remains closely monitored, particularly as Trump has called for lower borrowing costs, leaving market participants with heightened uncertainty on future market directions.
Ongoing geopolitical developments necessitate investor caution, with many adopting wait-and-see strategies until clearer signals emerge. This prolongs the struggle for bullish momentum, leaving bears to dominate the psychological sentiment of the market. The focus remains clear; until tangible indicators of recovery emerge, and political uncertainties dissipate, investors remain apprehensive about reinvesting with conviction.