Indian equity markets ended Friday’s session on a cautious and negative note, snapping a short-lived recovery as investors turned risk-averse ahead of the Union Budget and in response to weak global cues. The benchmark indices gave up early gains and drifted lower through the day, reflecting profit booking and persistent concern over foreign fund outflows, currency weakness and uncertain global growth signals.
The BSE Sensex closed lower by nearly 300 points, settling around the 82,200 level, while the NSE Nifty 50 slipped below the 25,350 mark. Market participants described the day’s movement as a consolidation phase after recent volatility, with traders unwilling to build aggressive long positions before gaining clarity on policy direction from the forthcoming budget and on the trajectory of global monetary policy.
Markets saw a notable erosion in investor wealth as benchmark indices slipped from their recent highs. During early trade, the sell-off was sharper, with both indices sliding more steeply; within the first quarter of the session nearly Rs 4 lakh crore in market capitalisation was wiped out as investors booked profits and reduced exposure amid uncertainty ahead of the Union Budget and pressure from currency and global cues.
Selling pressure was broad-based, though more pronounced in cyclical and commodity-linked stocks. Metal shares were among the worst performers, extending their recent decline amid worries about slowing global demand and softer price outlooks. Banking and financial stocks also faced pressure as concerns lingered over margin compression, asset quality risks and subdued credit growth in certain pockets. Information technology shares weakened as well, weighed down by cautious commentary on overseas demand and the impact of currency fluctuations on earnings visibility.
In contrast, defensive sectors provided limited support to the indices. Select fast-moving consumer goods stocks saw modest buying, as investors sought safety in companies with stable cash flows and pricing power. A few healthcare and pharmaceutical names also attracted interest on stock-specific developments, though these gains were not sufficient to offset the broader market weakness.
The cautious mood was reinforced by developments in the currency market, with the rupee remaining under pressure against the US dollar. Persistent foreign institutional investor selling has continued to weigh on the currency as well as on equity markets, creating a feedback loop of weakness. Rising crude oil prices and a firm dollar globally added to the headwinds, keeping investors on the sidelines.
Friday’s decline capped a difficult week and a subdued January for Indian equities, with benchmarks on track for one of their weakest monthly performances in recent quarters. The month has been marked by sharp swings, driven by global risk-off sentiment, uncertainty around interest rate trajectories in major economies, and concerns over global trade and geopolitical tensions. Domestic factors, including mixed corporate earnings and cautious guidance from several companies, have also tempered optimism.
Market participants noted that valuations in certain pockets of the market remain elevated despite the recent correction, prompting investors to be selective and focus on quality stocks with strong balance sheets and visible earnings growth. At the same time, some see the ongoing weakness as a gradual opportunity to accumulate fundamentally strong names, particularly if policy clarity and macro stability improve in the coming weeks.
Looking ahead, attention is firmly focused on the Union Budget and its potential impact on growth-oriented sectors such as infrastructure, manufacturing, capital goods and consumption. Any signals on fiscal discipline, capex spending and measures to support private investment will be closely scrutinised. Global cues, including movements in US bond yields, the dollar and commodity prices, are also expected to remain key drivers of near-term market direction.
Overall, Friday’s close reflected a market in wait-and-watch mode. While long-term structural positives for the Indian economy remain intact, near-term sentiment continues to be shaped by uncertainty and caution, suggesting that volatility is likely to persist in the sessions ahead.