Sensex, Nifty down over 4% in January as FPI selling, weak rupee and global risks weigh on markets
Indian equities have had a weak start to 2026, with the Sensex and Nifty slipping more than 4% in January amid foreign portfolio outflows, rupee pressure, softer earnings and a risk-off global backdrop. Investors are watching for any shift in sentiment ahead of the Union Budget 2026-27.
India’s benchmark equity indices have slipped more than 4% so far in January 2026, reflecting a broad risk-off mood as domestic and global headwinds converge. Market data cited in reports shows the BSE Sensex and NSE Nifty both falling by a little over four percent during the month.
The drivers flagged by analysts include sustained foreign portfolio investor (FPI) selling, a weakening rupee, muted corporate earnings from some heavyweight sectors, and geopolitical uncertainty. Renewed tariff concerns and a cautious global macro environment have also weighed on investor confidence.
What’s pressuring sentiment
- Foreign fund outflows as global investors reduce risk exposure.
- Rupee weakness, adding to concerns around imported inflation and external stability.
- Earnings disappointments in key sectors such as IT, banking and consumption-linked segments.
- Geopolitical tensions, higher crude, and rising global bond yields amplifying volatility.
Market participants are also looking to seasonal patterns and policy catalysts for direction. Analysts noted that January is often weak for equities and that some years have seen a recovery after Republic Day as the Budget nears, though such a bounce is not guaranteed in a choppy global setting.
Attention is now turning to the Union Budget 2026-27 and whether it can strike a balance between growth support and macro stability. With global uncertainty still high, traders and long-term investors are likely to remain sensitive to policy cues, fiscal signals and risk appetite in the weeks ahead.