Domestic benchmark indices continued their freefall for the third straight session on Wednesday as Nifty 50 and Sensex both declined 1.2 per cent each.
Both indices have fallen nearly 3 per cent in a month. Markets have been trailing lower due to multiple reasons, including continuous FII selling in the domestic market and trade deal uncertainty between the US and India. Freshly flared reasons contributing to the market's decline include the postponement of the US SC's verdict on Trump's tariff powers and tensions between the US and Europe over the US's push to take over Greenland. Markets have also turned volatile as India Inc started reporting its third-quarter earnings for the financial year 2026. As of Jan 20, the market has wiped Rs 12 lakh crore of investors' wealth over the last three sessions, a 2.58 per cent decline, falling from Rs 4.6 lakh crore on Jan 16 to Rs 4.5 crore on Jan 20 The market shed Rs 2.6 lakh crore between Jan 16 and Jan 19, followed by a sharper drawdown of Rs 9.4 lakh crore, down 2.03 per cent, between Jan 19 and Jan 20 The Nifty 50 opened 0.36 per cent lower at 25,141, and Sensex opened 0.47 per cent down at 81,794.65. The indices thereafter came under pressure with NSE Nifty 50 falling over 300 points, meanwhile BSE Sensex also fell nearly 1,056 points. At 10:35 a.m. the Nifty index was trading below the 200-DMA for the first time since May 2025. On NSE, all 15 sectors were in the red. Nifty Chemicals and Nifty Consumer Durables are declining the most, dropping below 2 per cent during Wednesday's trading session. Market breadth remained sharply negative, with only 541 of the 3,088 traded stocks advancing, while 2,461 declined and 86 ended unchanged as of 11:04 AM on January 21, 2026. Consequently, the rupee weakened to a new record low, past the 91 level at 91.38 per dollar.
US SC Hearing
The market sentiments were shaky following the US Supreme Court hearing on Donald Trump’s tariff powers. On Wednesday, the US Supreme Court continued hearing the case questioning Trump's powers to impose global tariffs on almost all nations across the globe. The court, however, left the markets in suspense by setting its next opinion day as Feb 20.
US Tariff threat
A slew of tariff threats ranging from the Sanctioning Russia Act, which threatens a 500 per cent tariff on imports from countries dealing in Russian-origin oil and uranium, to 10-25 per cent tariff on 8 European countries opposing America's control of Greenland has heavily impacted the market sentiment in the past couple of sessions.
In the Greenland matter, India is only a bystander, but still, the markets seem to be trailing under continued pressure from global geopolitical headwinds.
In a post on Truth Social last weekend, Trump said that Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland would face the tariff, which would climb to 25 percent on June 1 if a deal is not in place for 'the Complete and Total purchase of Greenland' by the United States. Trump claimed the move is necessary for national security, citing China's and Russia's interest in the territory.
FIIs Selling
Foreign portfolio investors continued their heavy selling streak, pulling out Rs 2,938.33 crore from Indian equities on January 20, 2026, as per exchange data. FPI sell orders worth Rs 17,153.44 crore far exceeded their purchases of Rs 14,215.11 crore, marking a sharp net outflow that has added to the sustained pressure on the markets.
In contrast, domestic institutional investors stepped in as stabilising buyers, recording a strong net inflow of Rs 3,665.69 crore on the same day, with total purchases of Rs 18,529.36 crore against sales of Rs 14,863.67 crore. The persistent FPI withdrawal amid global uncertainty has been a key factor amplifying volatility and deepening the recent market decline.
Trade Deal Uncertainty
Another factor weighing on the market is the long‑pending trade agreement between India and the United States, which remains unresolved, even after six rounds of negotiations since March.
The Trump administration has imposed tariffs of up to 50 per cent on Indian goods, including 25 per cent on India's purchases of Russian oil, among the highest levied on any country. India condemned these measures as "unfair, unjustified, and unreasonable."
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
