The Indian stock market’s losing streak continued for the third consecutive session, with benchmark indices witnessing a sharp sell-off on Monday. By the end of the trading day, the Sensex plunged 1.28% (1,065 points) to close at 82,180.47, while the Nifty 50 declined 1.38% (353 points) to settle at 25,232.
Here are the key reasons behind today’s market downturn:
Negative Cues from Global Markets
Global markets turned volatile after former US President Donald Trump threatened to impose additional tariffs on eight European countries. Trump warned that if the US is not allowed to acquire Greenland, a 10% additional tariff would be levied from February 1 on imports from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the UK, which could rise to 25% from June 1 if the issue remains unresolved. Following these remarks, EUROSTOXX 50 and DAX futures fell around 1.1%, while Japan’s Nikkei index dropped nearly 1%. Although US equity markets were closed due to Martin Luther King Jr. Day, US stock futures were trading 0.7% lower, adding to global risk aversion.
Uncertainty Over the Next US Fed Chair
Market sentiment was further dented by uncertainty surrounding the appointment of the next US Federal Reserve Chair. Trump stated that Kevin Hassett would not be appointed as Fed Chair and would continue as Director of the White House National Economic Council. Hassett is considered supportive of interest rate cuts, and uncertainty over his role has dimmed hopes of rate reductions in 2026, negatively impacting global markets.
Continued Selling by Foreign Investors
Foreign Institutional Investors (FIIs) remained net sellers for the ninth consecutive session, offloading shares worth ₹4,346.13 crore on Friday. According to V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, FIIs have sold shares worth ₹22,529 crore in January so far. He noted that India’s market performance has lagged behind other major global markets at the start of the year.
Weak Q3 Earnings Pressure
Mixed results from the December quarter (Q3) added pressure on equities. The Nifty IT index fell around 1%, with Wipro shares tumbling up to 9%, the steepest decline in the sector. Banking stocks were also under stress, as ICICI Bank slipped nearly 3% after reporting weaker-than-expected performance due to higher provisions. Prashanth Tapse, Senior VP (Research) at Mehta Equities, told Reuters, “Mixed earnings from blue-chip companies have made the market cautious. Investor confidence has weakened, and buying interest is limited to select stocks.”
Sharp Rise in India VIX
The India VIX, which measures market volatility and investor fear, jumped over 5% to 11.98. A rising VIX typically signals increased uncertainty, indicating that investors are becoming more cautious and avoiding risk.
Overall, a combination of global trade tensions, policy uncertainty in the US, persistent FII selling, weak quarterly earnings, and rising volatility led to a broad-based sell-off in Indian equities today.