Markets fall 4% in January over foreign fund outflows

The 30-share BSE Sensex tumbled 3,682.9 points, or 4.32%, and the 50-share NSE Nifty tanked 1,080.95 points, or 4.1%, so far this month.

“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.

In January 2025 also, the 30-share BSE benchmark had declined 638.44 points, or 0.81% . In January 2024, 2023, 2022, 2021, and 2020 also, the BSE benchmark had declined.

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OTHER FACTORS A weaker rupee, muted corp earnings, geopolitical risks and fresh tariff woes

“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,” Ponmudi R, CEO – Enrich Money, an online trading and wealth tech firm, said.

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Elevated crude oil prices in international markets, alongside rising global bond yields, have further compounded risk aversion, keeping investors cautious and reinforcing a defensive stance as markets navigate an increasingly uncertain global macro and geopolitical landscape, he said.

The rupee hit a historic low of 92 against the US dollar on January 23. The local currency has slumped over 2% so far this month. According to a report by 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.

Last week, the BSE benchmark tanked 2,032.65 points, or 2.43%, and the Nifty declined 645.7 points, or 2.51%.