The Sensex opened higher at 82,335.94 and climbed to an intraday peak of 82,516.27, but the rally quickly ran out of steam as profit-booking set in at elevated levels. By around 1:40 pm, the 30-share index was trading at 81,570.90, down 736.47 points, or 0.89%. The Nifty followed a similar trajectory, sliding below to 25,063.10, down 226.80 points, or 0.9%, after reaching a high of 25,347.95 during the session.
The selloff came a day after benchmarks snapped a three-session losing streak. Early sentiment on Friday drew mild support from gains across Asian markets and a cooling of geopolitical concerns linked to Greenland.
Reflecting the damage, the total market capitalization of BSE-listed companies fell by Rs 5.7 lakh crore to Rs 452.69 lakh crore.
Here are the key factors behind the market’s decline today:
1) Relentless FII outflows
Persistent foreign selling remained the dominant drag on sentiment. Foreign Institutional Investors offloaded equities worth Rs 2,550 crore on Thursday, marking the 13th straight session of net selling so far in January. FIIs have been net buyers only once this month, on January 2.
The tug-of-war between foreign sellers and domestic buyers that defined market action through much of 2025 has carried into 2026 as well.The pattern of sustained FII selling and DII buying which dominated the market trend in 2025 has been continuing in 2026, too, so far, said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, adding that whether this pattern will change with FIIs also turning buyers is the important question which investors have been asking for sometime now.
“Partly the Budget to be presented on February 1st will offer some insights, if there are some market-friendly proposals. More importantly, the FII stance towards India will be determined by the trend in India’s corporate earnings. Higher earnings growth alone can ensure sustained buying by FIIs since they have the option to invest in other markets where valuations are cheaper and earnings are better. Since earnings growth is sometime away and the FII selling strategy is expected to continue, preempting any healthy rally, the market is heavily net short. FIIs are adding to the short positions on every rally triggered by some positive news. The broader market, where FII presence is limited, is like to witness action in response to Q3 results,” said Vijayakumar.
2) Rupee sinks to a fresh record low
Pressure on domestic assets intensified as the Indian rupee slid to a new all-time low against the U.S. dollar, amplifying risk aversion in equities. The currency weakened past its previous trough of 91.7425 to trade as low as 91.77, marking a decline of about 0.2% on the day.
The move was driven largely by sustained dollar demand from corporates and importers, which overwhelmed early stability in the currency market and compounded existing pressure on the rupee. The fresh record low reflected concerns around capital outflows and elevated demand for dollars, further denting investor sentiment in local stocks.
MORE TO COME…
