Benchmark indices extended their losses on Tuesday, registering their biggest single-day fall in eight months (May 13), as weak corporate earnings and renewed concerns over rising geopolitical tensions saw investors taking money off the table.
Both the Sensex and Nifty closed at three-month lows at 82,180.47 (down 1,065 points or 1.28%) and 25,232 (down 353 points or 1.38%), making India the worst-performing market in Asia. Market volatility, as measured by the India VIX, surged 7.63% to 12.73.
Persistent Foreign Institutional Selling
The beginning of 2026 has seen persistent foreign institutional selling. This, coupled with a weaker currency environment, has further weighed on investor confidence.
So far in January, foreign portfolio investors have offloaded shares worth about $3 billion (Rs 27,504 crore). On Tuesday, they sold shares worth $323 million (Rs 2,938 crore) as per provisional data by the BSE.
At the same time, domestic institutional investors (DIIs) bought shares worth Rs 41,977 crore so far in January, including Rs 3,666 crore of Tuesday.
Investors are also closely watching developments from Davos, where US President Donald Trump said he would meet several parties to discuss his plan to take control of Greenland.
Saurabh Mukherjea, founder and CIO of Marcellus Investment Managers, noted that Tuesday’s fall was driven by a combination of weak earnings growth, the absence of any visible progress on an India–US trade deal, and expensive market valuations.
“Indian valuations are among the highest in the world, while earnings growth is among the weakest, which is why foreign investors are selling,” he said.
Global Market Uncertainty Rises
Arun Kejriwal, founder, Kejriwal Research & Investment Services, added that India, along with the rest of the world, is in a state of heightened uncertainty. “People don’t know what is going to happen next. One should not be surprised if the Dow also sees a sharp fall today,” he said.
He believes that investors can only hope India signs an agreement with EU leaders during their January 26 visit.
According to him, most market participants have largely given up hope on an India–US deal, while earnings have also been disappointing. “It is yet another quarter showing a big gap between expectations and actual numbers,” he added.
Since their recent peak on January 2, the Sensex and Nifty have declined 4.18% and 4.16%, respectively. Over the same period, the broader BSE Midcap and BSE Smallcap indices have fallen 5.70% and 8.09%, respectively. As a result, investor wealth has eroded by Rs 25.42 lakh crore since January 2, of which Rs 9.86 lakh crore was wiped out on Tuesday alone.
Market breadth was firmly negative, with 3,503 losers against 780 gainers on the BSE. The broader market witnessed sharp selling pressure, with both the BSE Midcap and BSE Smallcap indices declining by over 2.5% on Tuesday.
Sectoral Indices End Red
All sectoral indices on the BSE and NSE ended in the red. Realty was the worst-performing sector, tumbling 5.21%, followed by services, capital goods, consumer discretionary and consumer durables, each falling more than 2.5%.
Barring HDFC Bank, all other Sensex stocks and all but three stocks in the Nifty 50 ended in the red. Eternal, Bajaj Finance, Sun Pharma, Bajaj Finserv and IndiGo were the top Sensex laggards, declining by up to 4.02%.
In Asia, Thailand (up 1.03%) and Taiwan (up 0.38%) were the only gainers, while India, the Philippines, Japan and Malaysia were among the top losers.