The Indian stock market was in a tailspin on Tuesday, witnessing heavy selling. Weak global cues, continued foreign investor outflows, and mixed quarterly results dented investor confidence. By the end of the day, the Sensex fell 1,065.71 points to close at 82,180.47, while the Nifty slipped 353 points to 25,232.50. The Nifty also fell below the 25,200 mark for the first time since October 15, 2025. It's a different matter that the Nifty recovered above that level by market close.

In the Nifty 50, stocks like Bajaj Finance, Bajaj Finserv, and Eternal fell up to 2%. NTPC and Hindustan Unilever held firm with modest gains. The market breadth remained largely negative: over 800 stocks advanced while over 3,000 declined.

Midcap and Smallcap Stocks Face More Pain

Along with benchmarks, midcap and smallcap stocks also fell sharply. The Nifty Midcap 100 fell nearly 2% and slipped below its 100-day moving average intraday. Oberoi Realty was the biggest loser. The Nifty Smallcap 100 fell for the third consecutive session, losing more than 3%. Stocks like Newgen Software, Data Patterns, Ola Electric, and Aditya Birla Real Estate fell by up to 12%.

Why the Market Declined So Much

Trade War Concerns: New uncertainty surrounding US tariff policy has resurfaced trade war concerns, impacting risk appetite globally. Rising US Treasury yields and fears of escalating trade tensions between the US and Europe triggered a selloff in global markets, which also impacted Indian equities.

FII Selling: Continued selling by foreign institutional investors (FIIs) also dragged the market down. Foreign exchange-traded investors sold shares worth ₹3,262.82 crore on Monday, marking the 10th consecutive session of net outflows this month, excluding a small purchase on January 2. Continued foreign selling has put pressure on frontline indices and dampened buying interest.

Mixed Q3 Earnings: Earnings signals were mixed. Wipro Ltd. shares fell sharply on Monday after the IT company released weaker-than-expected short-term guidance with its December quarter results. The IT index fell 1.1%, the biggest loser among major sectors.

Weak Global Cues: Weak global cues further dampened sentiment. In Asian markets, South Korea's Kospi traded higher, while Japan's Nikkei 225, Shanghai's SSE Composite, and Hong Kong's Hang Seng were in the red. US markets were closed on Monday due to a federal holiday. Wall Street futures were down more than 1% on January 20.

Rupee Falls: Strong dollar demand from importers and continued foreign fund outflows weakened the rupee in trade, falling 8 paise to 90.98 against the US dollar. Forex traders said geopolitical uncertainty and a weak domestic equity market kept the currency under pressure.

US Supreme Court Decision on Trump Tariffs: Investors are also awaiting the US Supreme Court's potential decision on Trump-era tariffs. Vijaykumar said an adverse decision could quickly change market dynamics, although the timing and outcome are still uncertain.

Crude Prices Rise: Brent crude oil prices rose 0.11 percent to USD 64.01 per barrel. Rising crude prices raise concerns about inflation and fiscal pressures for India.

The PSU Bank Index fell more than 1 percent. Experts believe that if the Nifty fails to hold above 25550, market pressure may persist.