Five-Day Rout on Dalal Street: Tariff Fears, FII Exodus and Technical Cracks Push Nifty Below 25,700
| Index | Price | Change | % Chg |
| Nifty 50 | 25,683.30 | 193.55 | -0.75% |
| Nifty Bank | 59,251.55 | 434.95 | -0.73% |
| Nifty Financial | 27,382.10 | 290.50 | -1.05% |
| BSE SENSEX | 83,576.24 | 604.72 | -0.72% |
Indian equity markets ended the week on a bruising note, extending losses for a fifth consecutive session and logging their worst weekly fall in over three months. What began as cautious trading quickly turned into broad-based selling as global trade jitters, regulatory uncertainty from the US, and persistent foreign fund outflows combined to rattle investor confidence. By the close, the damage was unmistakable: benchmarks slipped decisively below key technical levels, volatility rose, and nearly ₹8 lakh crore in market capitalisation was wiped out in just five days.
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Markets Slide for Fifth Straight Session as Global Risks Take Centre Stage
On Friday, January 9, 2026, Indian equity benchmarks deepened losses amid mixed global cues and heightened uncertainty over a pending US Supreme Court verdict on the legality of tariffs imposed during the Trump presidency. The BSE Sensex fell 604.72 points, or 0.72 percent, to close at 83,576.24, while the NSE Nifty 50 dropped 193.55 points, or 0.75 percent, ending at 25,683.30—below the psychologically important 25,700 mark.
For the week, both the Sensex and the Nifty declined 2.5 percent each, underscoring the intensity of the selloff. Small- and mid-cap stocks underperformed, with the BSE Midcap index falling 0.9 percent and the Smallcap index losing 1.7 percent on Friday alone.
Selling Pressure Broadens as Sectoral Weakness Deepens
The decline was not limited to a handful of stocks. Fifteen of the 16 major sectors ended the week in the red, highlighting the breadth of the correction. Auto, FMCG, realty, and consumer durables fell 1–2 percent, while pharma also closed lower. Only IT and Oil & Gas managed to end Friday with modest gains.
Among heavyweight stocks, Reliance Industries slid 7.4 percent for the week, its worst weekly performance since October 2024, after the company indicated it does not expect Russian crude deliveries in January amid tariff uncertainty. HDFC Bank, the country’s largest private lender and the heaviest stock on the indices, fell 6.3 percent for the week, its sharpest weekly drop in nearly two years, dragging the banking index down 1.5 percent.
What This Means for Traders and Investors
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Traders: Elevated volatility, rising VIX, and expanding ban lists suggest tighter risk management and reduced leverage
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Investors: Defensive sectors and high-quality large caps continue to show relative resilience, but broader sentiment remains weak
Until clarity emerges on US tariffs, FII flows, and global cues, market participants are likely to stay cautious.
Top Gainers and Losers on the Nifty: Defensive Names Offer Limited Relief
Despite the heavy sell-off, a handful of stocks managed to stay afloat, largely driven by defensive positioning and selective buying.
Top Gainers on Nifty 50
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Asian Paints rose 1.88%, supported by defensive buying amid market volatility
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ONGC gained 1.16%, aided by firmness in crude prices
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HCL Technologies advanced 0.94%, as IT stocks offered relative stability
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Bharat Electronics added 0.55%, extending its recent resilience
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Dr Reddy’s Laboratories climbed 0.50%, benefiting from defensive pharma interest
Top Losers on Nifty 50
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Adani Enterprises fell 2.59%, amid broader risk aversion
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NTPC slipped 2.29%, tracking weakness in power utilities
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Adani Ports declined 2.10%, extending losses
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ICICI Bank dropped 2.09%, weighing on the banking index
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Jio Financial Services slid 2.04%, as financial stocks faced pressure
A trader noted, “Buying was purely selective. Investors stayed with defensives while exiting high-beta and rate-sensitive names.”
Sectoral Performance: Realty, Auto Lead Losses While IT, Oil & Gas Buck Trend
Sectoral indices painted a clear picture of risk aversion, with most sectors ending lower as investors cut exposure to cyclical and consumption-linked themes.
Top Gaining Sectors
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Oil & Gas: +0.40%
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IT: +0.28%
Strength in oil & gas was supported by higher crude prices, while IT stocks benefited from defensive positioning and relative insulation from domestic macro pressures.
Top Losing Sectors
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Realty: -2.26%
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Auto: -1.15%
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Consumer Durables: -1.14%
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FMCG: -1.08%
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Pharma: -0.88%
Rate-sensitive sectors such as real estate and autos bore the brunt of selling as rising global uncertainty and foreign fund outflows dampened sentiment.
Here’s What Happened Today and Why Traders Reacted
Friday’s session encapsulated the market’s fragile mood. Benchmarks opened weak, briefly attempted a rebound, but selling quickly intensified as the Nifty slipped below 25,850 and then slid to an intraday low of 25,623. Traders reacted swiftly to a mix of global headlines and technical breakdowns.
Key intraday reactions included:
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Aggressive unwinding of leveraged long positions
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Short-term traders adding bearish bets after key supports broke
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Defensive rotation into select IT and oil & gas stocks
A market participant said, “This is a classic risk-off phase. When global uncertainty rises and technical supports give way, traders prefer to cut exposure rather than wait.”
Market Breadth Weakens as Losers Outnumber Gainers Sharply
Market breadth clearly reflected the risk-off mood on Dalal Street. Declines overwhelmed advances, reinforcing the bearish undertone as selling pressure remained broad-based across segments.
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Advancers: 747
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Decliners: 2,395
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52-week highs: 27
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52-week lows: 307
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Upper circuit hits: 40
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Lower circuit hits: 84
The sharp skew toward decliners highlights how deeply the sell-off penetrated beyond frontline indices into the broader market.
Five Key Factors Rattling the Stock Market
The ongoing selloff has been driven by a convergence of global, macro, and technical triggers:
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Trump tariff stalemate clouds trade outlook: Investors are awaiting a US Supreme Court ruling on the legality of tariffs imposed under former US President Donald Trump. If declared illegal, the US may have to refund nearly $150 billion to importers, a development that could reshape global trade dynamics.
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Persistent FII selling: Foreign institutional investors sold equities worth ₹3,367.12 crore on Thursday, marking the fourth straight session of outflows.
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Subdued global cues: Asian and US futures remained muted, offering little support to domestic markets.
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Crude oil impact: Brent crude rose 0.53 percent to $62.32 a barrel, stoking concerns over India’s import bill and inflation.
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Technical breakdown signals: The Nifty slipped below its 50-day EMA and broke its rising trendline, triggering algorithmic and stop-loss selling.
Technical Picture Turns Fragile as Key Supports Break
From a technical standpoint, the market’s tone has decisively weakened. After closing below its 50-day EMA in the previous session, the Nifty confirmed a breakdown of its rising trendline on the daily chart. The RSI slipped below 40, signaling strengthening bearish momentum, while DI– crossed above DI+ on the ADX indicator, suggesting downside dominance.
From its all-time high of 26,373 recorded on January 5, the Nifty has corrected about 2.62 percent in just four sessions. Analysts now see the 25,600–25,550 zone as immediate support. A sustained break below 25,550 could open the door to 25,400 and even 25,250. On the upside, 25,850–25,900 remains a stiff resistance band.
Stock-Specific Action Reflects Nervous Sentiment
Beyond the benchmarks, stock-specific volatility was pronounced. Elecon Engineering plunged 16 percent after reporting a 33 percent drop in Q3 consolidated profit. Keystone Realtors slipped 2 percent as Q3 pre-sales and collections dipped marginally. In contrast, Andhra Cements jumped 6 percent after promoters announced plans to offload a stake via an offer-for-sale.
On the Nifty, Adani Enterprises, NTPC, Adani Ports, ICICI Bank, and Jio Financial were among the top losers, while Asian Paints, ONGC, HCL Technologies, Bharat Electronics, and Dr Reddy’s featured among the gainers.
Rupee Weakens as Equity Selloff and Crude Weigh
The pressure was not confined to equities. The rupee fell 26 paise to close at 90.16 against the US dollar, reversing early gains. Forex traders cited elevated crude prices, persistent FII outflows, and weak equity sentiment as key drags. A stronger dollar and global risk aversion added to the pressure on the local currency.
Macro Undercurrents Add to Investor Caution
Adding to the unease, data showed India’s holdings of US Treasury notes fell 21 percent in 2025—the first annual decline in four years—signaling a strategic shift in reserve allocation amid geopolitical uncertainty. Meanwhile, anticipation around Budget 2026, scheduled for February 1, has grown, with taxpayers hoping for further relief after last year’s cuts, even as fiscal constraints remain.
Global markets offered little comfort. The Stoxx Europe 600 edged up 0.4 percent, while US futures and Asian indices were largely flat to marginally lower, reflecting a wait-and-watch approach ahead of key global developments.
Impact on Traders and Investor Portfolios
For short-term traders, the environment remains challenging. Elevated volatility—India VIX rose 3.06 percent to 10.93—and a weak advance-decline ratio (747 advancers vs 2,395 decliners) suggest caution. Many traders are reducing position sizes and avoiding overnight risk.
For long-term investors, the correction is testing conviction. While near-term sentiment is fragile, analysts note that quality large-cap stocks may present opportunities if valuations become more reasonable. However, portfolio diversification and disciplined allocation remain critical amid global uncertainty.
What Lies Ahead for Markets
Looking ahead, markets will closely track the US Supreme Court verdict on tariffs, FII flow trends, crude oil prices, and cues from the upcoming Budget. As Dr. VK Vijayakumar of Geojit Investments noted, “The details of the US verdict will matter. A complete striking down of tariffs could trigger a relief rally, while partial measures may keep volatility elevated.”
For now, the message from Dalal Street is clear: risk appetite has weakened, technicals have cracked, and global cues are calling the shots.
F&O Ban List Expands as Leverage Builds in Several Stocks
The derivatives segment also reflected heightened speculative activity, with several stocks nearing or entering the F&O ban list based on market-wide position limits (MWPL).
Stocks Currently in F&O Ban
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SAMMAANCAP – MWPL 145.71%
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SAIL – MWPL 125.49%
These stocks remain restricted for fresh F&O positions, allowing only square-offs.
Possible Entrants into Ban List (High MWPL Usage)
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KAYNES – 205.02%
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IRCTC – 187.27%
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IEX – 185.45%
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BANDHANBNK – 138.05%
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RVNL – 132.21%
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NBCC – 112.09%
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CONCOR – 110.97%
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LICHSGFIN – 110.58%
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HUDCO – 110.05%
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MANAPPURAM – 90.50%
High MWPL levels signal crowded trades, increasing the risk of sharp price swings if positions unwind.
A derivatives analyst said, “Elevated MWPL in multiple stocks during a falling market is risky. Any negative trigger can lead to fast and deep corrections.”
FAQs Sensex Drops 605 Points, Nifty Breaks 25,700
Q. Why did Indian stock markets fall for five consecutive sessions despite no domestic policy shock?
Indian equity markets declined for five straight sessions primarily due to global factors rather than domestic triggers. Uncertainty around the US Supreme Court’s ruling on Trump-era tariffs, persistent foreign institutional investor (FII) selling, rising crude oil prices, and a weakening rupee collectively pressured sentiment. When global trade risks rise, foreign investors tend to reduce exposure to emerging markets like India, triggering broad-based selling even in fundamentally strong stocks.
Q. How does the US Supreme Court ruling on Trump tariffs impact Indian stock markets?
The US Supreme Court verdict is crucial because it could reshape global trade flows. If Trump’s tariffs are declared illegal, the US may need to refund nearly $150 billion to importers, potentially easing global trade tensions. However, uncertainty ahead of the ruling has increased volatility. Indian markets, being sensitive to global risk sentiment, reacted negatively as investors avoided aggressive positions until legal clarity emerges.
Q. Why are foreign investors selling Indian equities even when valuations have corrected?
Foreign investors are currently prioritising capital preservation over valuations. Persistent FII selling is driven by geopolitical risks, potential US tariff escalation linked to India’s Russian oil purchases, and a strategic shift toward safer assets like US bonds and gold. Additionally, rising crude prices and rupee weakness increase macro risks, prompting FIIs to reduce exposure despite valuation comfort in select stocks.
Q. What does Nifty breaking below 25,700 signal for short-term market direction?
Nifty slipping below the 25,700 level is technically significant as it confirms a breakdown below its 50-day exponential moving average and rising trendline support. Momentum indicators such as RSI falling below 40 and a bearish crossover on ADX suggest strengthening downside pressure. In the short term, this raises the probability of further correction toward the 25,550–25,400 zone unless strong buying emerges.
Q. Which sectors are most vulnerable if global tariff tensions intensify further?
Sectors with higher global linkage and sensitivity to trade costs are most exposed. These include oil & gas, metals, autos, and capital goods. Financials may also face pressure due to FII outflows. In contrast, IT and selective defensive stocks such as FMCG and pharma may offer relative stability, though they are not entirely immune in a prolonged risk-off environment.
Q. How should long-term investors adjust portfolios during a prolonged market correction?
Long-term investors should avoid panic selling and instead focus on portfolio quality and diversification. Staggered buying in fundamentally strong large-cap stocks, maintaining exposure to defensives, and holding some allocation to gold or cash can help manage volatility. Corrections driven by global uncertainty often create opportunities, but disciplined asset allocation is critical to navigate extended market drawdowns.
Q. Does rising volatility and expanding F&O ban list indicate deeper market stress ahead?
Yes, rising volatility along with an expanding F&O ban list signals elevated speculative positioning and heightened risk. High market-wide position limits in multiple stocks suggest crowded trades, which can unwind sharply during negative news flow. For traders, this environment calls for tighter stop-losses and lower leverage, while investors should remain cautious about high-beta stocks.
