Sensex tanks over 650 pts, Nifty below 25,100 as selloff pressure, FII outflows weigh on sentiment

Indian equities traded lower on Wednesday, extending pressure from the previous session’s sharp selloff that dragged the Sensex and Nifty to their weakest levels in more than three months. Persistent foreign fund outflows, uneven corporate earnings and lingering concerns over global trade and geopolitics continued to weigh on sentiment.

The BSE Sensex tumbled over 650 points, to the day's low of 81,540, while the NSE Nifty 50 fell nearly 200 points, to slip below the 25,100 mark.

On the 30-stock Sensex, ICICI Bank, Trent, Bharat Electronics, Larsen & Toubro and HDFC Bank were among the biggest drags, with shares sliding between 0.5% and 1% in early trade.


Broader markets also came under pressure, with both the mid-cap and small-cap indices down about 0.3%.

Among individual stocks, shares of Persistent Systems fell 3.5%, retreating despite largely positive brokerage commentary following the IT services company’s December-quarter earnings.

AU Small Finance Bank shares rose more than 2% after posting a strong set of December-quarter results, including a 26% year-on-year increase in net profit.

The benchmark indexes were coming off a bruising session on Tuesday, when the Nifty 50 and the Sensex dropped about 1.4% and 1.3%, respectively, their steepest single-day percentage declines in more than eight months, ending at their lowest closing levels in over three months.

Expert views

There is risk-off sentiment in global markets now in response to Trump’s Greenland policy, the threatened tariffs on eight European countries and Europe’s hardening anti-Trump stance and globally stock markets are down and the flight to the safety of gold is up and there is no clarity on how the situation will evolve, said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

"If the threatened tariffs come into effect, Europe will retaliate and this will lead to a trade war with bad consequences for global trade and global growth. If such a scenario plays out stock markets will witness further selling. On the other hand, if Trump chickens out as he had done in the past, or succumbs to pressure, markets will rebound. A combined and united Europe has many options like the much talked about ‘Sell America’ wherein they sell US treasuries leading to sharp fall in dollar. This will hurt Trump. Public opinion in US is also against Trump’s Greenland annexation plan. Many unexpected developments can happen and the market is likely to react strongly to the developments," said Vijayakumar.

Investors can watch and wait for normalcy and stability to return, Vijayakumar said, adding that fairly-valued largecap stocks, particularly in banking, are likely to remain resilient.

FII/DII Tracker

On the institutional front, Foreign Institutional Investors (FIIs) sold equities worth a little over Rs 2,938 crore on January 20, while Domestic Institutional Investors (DIIs) were net buyers to the tune of Rs 3,666 crore.

Global Markets

Asian stocks fell for a third straight session on Wednesday, pressured by renewed geopolitical unease after fresh U.S. rhetoric on Greenland ahead of U.S President Donald Trump’s speech in Davos. Risk sentiment remained fragile even as a recent global bond selloff showed signs of easing.

Markets were also unsettled by concerns over renewed offshore selling of U.S. assets, reviving the so-called “Sell America” trade. Wall Street slid more than 2% overnight, while the U.S. dollar logged its sharpest daily decline in over a month, pushing investors toward traditional safe havens.

MSCI’s broad Asia-Pacific index excluding Japan fell 0.3% in early trade. Japan’s Nikkei dropped 1.2%, extending its losing streak to a fifth session.

Gold and silver climbed to fresh highs, underscoring the risk-off tone.Gold rose 0.8% to a record $4,806 an ounce, while silver gained 0.4% to $95.01, hovering near its recent peak.

U.S. equity futures edged higher, with Nasdaq and S&P 500 futures up 0.2%, following Wall Street’s steepest one-day decline in three months. In Europe, Euro Stoxx 50 and DAX futures slipped 0.4%.

Crude impact

Oil prices fell Wednesday, pressured by expectations of a build in U.S. crude inventories that overshadowed temporary production disruptions at two major fields in Kazakhstan and lingering geopolitical unease tied to U.S. tariff threats.

Brent crude futures dropped 79 cents, or 1.2%, to $64.13 a barrel, while U.S. West Texas Intermediate fell 64 cents, or 1.1%, to $59.72 in early Asian trading.

Rupee vs Dollar

The Indian rupee fell to a record low on Wednesday, slipping past its previous trough of 91.0750 in early trade, weakening about 0.24% to 91.19 against the dollar, weighed down by a risk-off shift in global markets as geopolitical tensions surrounding Greenland added to existing pressures on the currency.

Meanwhile, the U.S. dollar was little changed at 98.56 against a basket of major peers, after posting its steepest daily decline since early December in the previous session.

(with inputs from agencies)