NEW DELHI: India’s benchmark equity indices - BSE Sensex and NSE Nifty 50 - extended losses for the fifth straight session on Friday amid concerns over potential new US tariffs, foreign institutional investor (FII) outflows, geopolitical tensions, and caution ahead of Q3FY26 earnings.
The week ended on Friday with the Sensex falling 604 points, or 0.72% to settle at 83,576, while the Nifty 50 fell 195.55 points or 075% to close at 25,683. During the week, the Nifty crashed 618.35 points (2.35%) and the Sensex erased 2,111 points (2.46%). This is the biggest weekly fall for the frontline indices in more than 3 months.
The Nifty Smallcap and Midcap indices fell about 3% each this week, highlighting weakness in the broader equity market. Investors' wealth got eroded by Rs 13 lakh crore in five days as the overall market capitalisation of BSE-listed firms came down below Rs 468 lakh crore from over Rs 481 lakh crore on January 2.
“The Indian market remains in a consolidation phase due to weak global cues, rising global bond yields, and persistent FII outflows, all of which weigh on sentiment ahead of the positive Q3 earnings outlook. Domestic risk-off sentiment has intensified amid uncertainty surrounding US-India tariff negotiations and escalating geopolitical tensions,” said Vinod Nair, Head of Research, Geojit Investments.
Concerns about potential US trade measures targeting nations purchasing Russian oil have soured market sentiment in the past two sessions. US Senator Lindsey Graham stated that President Donald Trump has greenlit legislation to impose steep tariff hikes on countries like India, China, and Brazil for ignoring international sanctions on Russian energy imports. He warned that tariffs on India and China might surge by up to 500% as soon as next week, heightening worries of renewed global trade.
The US Supreme Court is likely to issue its order on Trump's tariffs on Friday. If the Court rules against Trump, market experts see it as major relief for the markets.
“Market sentiment stayed subdued amid elevated geopolitical and global trade-related concerns, particularly renewed uncertainty around potential U.S. tariff actions and related Supreme Court developments. Persistent foreign institutional selling and weakness across broader risk assets further compounded the negative bias, while heavyweights also added to the downside pressure,” said Ajit Mishra – SVP, Research, Religare Broking.
Ashika Institutional Equities said that on the macro front, market participants remained cautious ahead of the domestic inflation data for December, scheduled to be released on Monday. On the global front, market participants stayed on the sidelines amid caution ahead of a US Supreme Court decision on the validity of American tariffs. Sentiment was further dented after US Commerce Secretary Howard Lutnick indicated on Friday that the India–US trade agreement had been delayed, stated the brokerage.
Further, all sectoral indices closed in the red this week. The Nifty Energy index declined 5% while the Nifty Metal, Nifty Realty and the Nifty Auto index fell between 2% to 3% this week. Among Nifty stocks, shares of HDFC fell more than 6% this week, its biggest decline in 2 years. Tata Group’s Trent lost nearly 10% while index heavyweight Reliance Industries Ltd plummeted 8%.