Sensex, Nifty slide over 4% in January amid FPI sell-off, rupee weakness and global risks

India’s benchmark equity indices Sensex and Nifty have slipped more than 4% so far in January, dragged down by sustained foreign fund outflows, a weakening rupee, muted corporate earnings, geopolitical tensions and renewed tariff concerns, according to market data.The 30-share BSE Sensex has fallen 3,682.9 points, or 4.32%, during the month, while the 50-share NSE Nifty has dropped 1,080.95 points, or 4.13%, PTI reported.“Historically, similar pre-Budget trends in January have witnessed a sharp fall followed by a recovery post-Republic Day leading up to the Budget; market participants will be hoping for a similar reversal this time,” Santosh Meena, Head of Research at Swastika Investmart Ltd, said.January has traditionally been weak for equities. In January 2025, the Sensex had declined 638.44 points, or 0.81%, and the benchmark had also ended lower in January 2024, 2023, 2022, 2021 and 2020.“So far in January 2026, both the Sensex and the Nifty have declined by over 4%, with geopolitical uncertainties and fresh tariff concerns exerting a cascading impact on domestic equities. The global risk-off environment has prompted aggressive selling by foreign portfolio investors during the month. This has added pressure on the rupee, which has slipped to record lows,” said Ponmudi R, CEO of Enrich Money.The rupee hit a historic low of 92 against the US dollar on January 23 and has weakened by over 2% so far this month. Elevated crude oil prices and rising global bond yields have further fuelled risk aversion, keeping investors cautious amid an uncertain global macro and geopolitical backdrop, Ponmudi added.“Earnings disappointments from select heavyweight stocks across sectors, including IT, banking and consumption-linked segments, have further dampened investor optimism, leading to a disappointing start to the year,” he said.According to Axis Securities, with global uncertainty, domestic growth resilience and fiscal discipline all in play, the Union Budget 2026-27 is expected to strike a balance between growth support and macro stability. “Markets are likely to favour a Budget that sustains growth without compromising medium-term fiscal consolidation,” the report said.Last week alone, the Sensex declined 2,032.65 points, or 2.43%, while the Nifty fell 645.7 points, or 2.51%.“The decline in domestic equities can be attributed to a combination of persistent global and domestic headwinds. On the domestic front, underwhelming and cautious Q3 earnings commentary from several corporates emerged as a key trigger,” said Ravi Singh, Chief Research Officer at Master Capital Services Ltd. He added that renewed trade concerns involving the US and Europe and escalating geopolitical tensions in the Middle East have kept global markets on edge.Sudeep Shah, Head of Technical & Derivatives Research at SBI Securities, said geopolitical developments may influence near-term market moves, but earnings trends and domestic macro conditions will drive follow-through.VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, said FPIs not only continued selling in the week ended January 23 but also stepped up the pace. “Sentiments remained very weak due to sustained rupee depreciation, lack of finality on a US-India trade deal and unimpressive Q3 results so far, which are not indicating any pick-up in corporate earnings,” he said.