Stock market crash: The Indian stock market remained in the bear grip for the sixth consecutive session on Monday, January 12, on rising geopolitical risks, concerns over US tariffs, and relentless foreign capital outflow.
The Sensex crashed over 500 points, or more than 0.60%, to an intraday low of 83,043, while the Nifty 50 dropped to 25,529 during the session on Monday, falling 0.60%.
Over the six consecutive sessions, the Sensex has tanked over 2,700 points, or more than 3%, while the Nifty 50, too, has shed more than 3%.
Investors’ wealth has been eroded by more than ₹16 lakh crore in these six sessions, as the overall market capitalisation of BSE-listed firms dropped to nearly ₹465 lakh crore from over ₹481 lakh crore in January 2.
Why is the stock market down?
Here are five major factors that are behind the sharp selloff in the Indian stock market:
1. Concerns over the US tariffs
While a trade deal between India and the US remains elusive despite several rounds of talks, the market is nervous that the US may increase tariffs on Indian goods to as much as 500% if the Russia sanctions bill, the Sanctioning of Russia Act of 2025, is passed.
On January 7, Republican Senator Lindsey Graham said that Trump had backed the Russia sanctions bill, which could raise US tariffs to at least 500% on countries that buy Russian oil.
Experts say that if the bill becomes a US law, it will be a significant blow to India, which is already facing a steep 50% tariff.
2. Persistent foreign fund outflows
Foreign institutional investors have been continuously selling Indian stocks since July last year due to a growth-valuation mismatch, the rupee’s weakness, and US tariffs on India.
In the cash segment, FIIs have sold off Indian stocks worth nearly ₹12,000 crore so far in January (till the 9th). From July to December last year, FIIs cumulatively sold off Indian stocks worth nearly ₹1.85 lakh crore.
Foreign capital outflow is one of the biggest reasons behind the underperformance of the Indian stock market. Experts say an India-US trade deal and healthy earnings growth will bring back FIIs to the Indian stock market.
“It appears that if FIIs are to turn buyers in India, sentiments have to improve with positive developments on the US-India trade agreement and uptick in earnings growth,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
(This is a developing story. Please check back for fresh updates.)
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
