NEW DELHI: India’s equity market fell sharply on Tuesday due to escalating global trade tensions and continued foreign capital outflows. The selloff of Tuesday was so intense that it wiped out nearly Rs 10 lakh crore from investors’ kitty and benchmark NSE Nifty fell to its lowest level in 3 months and experienced its biggest single-day fall since April 2025.
Investor sentiment across the globe has taken a hit over concerns related to US President Donald Trump proposing tariffs on countries opposing his bid to control Greenland and the subsequent pushback from Europe. This has revived fears of renewed global trade disruptions, prompting investors to exit equities.
The NSE Nifty settled 353 points or 1.38% lower at 25,232.50 while the BSE Sensex tumbled 1,066 points or 1.28% to close at 82,180. The sell-off was such that 48 stocks in the Nifty50 pack ended in the red and the market capitalisation of BSE-listed firms came down to Rs 455.76 lakh crore from Rs 465.19 lakh crore.
Vinod Nair, Head of Research, Geojit Investments said that domestic markets remained cautious ahead of the U.S. Supreme Court’s ruling on Trump-era tariffs, with renewed uncertainty over U.S. trade policy prolonging the recent consolidation.
He added that continued FII outflows, rising U.S. and Japanese bond yields, and a weakening rupee weighed on investor confidence. In the near term, market sentiment will hinge on the earnings season, while geopolitical developments and global trade conditions remain important influences, stated Nair.
The rupee ended at 90.98 per dollar, slightly weaker than Monday’s close of 90.91. In the broader market, the Nifty Midcap 100 and Nifty Smallcap 100 underperformed the frontline indices, falling by up to 3% each.
Ashika Institutional Equities said that sustained selling by foreign portfolio investors added to the downside pressure in domestic equities. It added that heightened global uncertainty and falling equity markets prompted investors to shift towards safe-haven assets, with gold and silver trading at record highs.
FIIs sold equities worth Rs 2,192 crore on Tuesday, marking the 11th consecutive session of net outflows this month. FII selling reached Rs 22,529 crore through January 16 with net sales on all but one day this month.
India’s equity market is having a turbulent start to 2026 due to US President Donald Trump’s unpredictable foreign and tariff policies. Actions like arresting Venezuela’s President Nicolas Maduro, confronting Iran, threatening 500% tariffs on nations buying Russian oil and pushing to claim Greenland while targeting European allies with duties have spiked geopolitical tensions. These moves have amplified market volatility amid ongoing trade uncertainties.
Experts believe that these actions have driven investors to safe havens, prompting exits from riskier equities, especially in emerging markets and tariff-exposed sectors. The latest market jolt follows Trump’s weekend signal of higher tariffs on several European nations from February 1.
Besides his growing hostility with long-term ally the European Union, Trump’s threat of slapping 500% tariffs on imports from nations buying Russian oil has put serious pressure on India as the country is the second-largest importer of discounted Russian crude. Existing US tariffs of up to 50% on Indian goods have already put Indian exporters at a disadvantage.
Further, not-so-encouraging Q3FY26 earnings results from blue-chip heavyweights have also jolted sentiments in the Indian market. So far, the results of HDFC Bank, RIL, ICICI Bank and major IT firms have disappointed the street.