The stock market remains in a downward motion, and the major indices are under pressure within today’s trading session. Investor caution is evident, cashing in on rallies to lock in the gains. It reflects the uncertainty of correcting the market and what might become of them, leaving many wondering why the market is down today.
The Nifty 50 declined 1.10% to go below the 24,000 mark and also broke its 200-day moving average (DMA). The Sensex declined 0.86% to close at 78,534. Broader market indices declined more sharply, with the Nifty Smallcap 100 index declining 2.2% and the Nifty Midcap 100 index declining 1.9%.
Why Market is Down Today? External Pressures Driving Market Weakness
Global economic factors are weighing heavily on Indian equities. Market worries relating to President-elect Donald Trump’s intended trade policies, including tariffs for China and other emerging markets, have spooked investors. Expectations that the US Federal Reserve will not cut the interest rate as much in 2025 have also made the US dollar more competitive, placing pressure on currencies like the Indian rupee of emerging market nations.
Headwinds have been added to with rising crude oil prices, as India depends on imports for 80% of its oil. Higher oil prices have a cascading effect: raw material costs go up, and it is likely to drive inflation higher. These global and macroeconomic factors are among the reasons why market is down today.
Foreign and domestic flows show diverging trends
Foreign Portfolio Investors (FPIs) have turned net sellers, pulling ₹4,285 crore from Indian equities in the first three trading sessions of January. The reversal comes after December’s ₹15,446 crore net inflows. However, Domestic Institutional Investors (DIIs) continue to be bullish and provide some support to the market.
Despite external pressure, analysts do suggest that resiliency in segments like auto sales points to greater-than-expected demand. Still, high valuations, the strength of the US dollar, and geopolitical tensions keep investor sentiment mixed.
Experts believe market volatility will continue because investors are repositioning their portfolios ahead of the Union Budget. Key global data, such as FOMC minutes and US non-farm payroll reports, will influence sentiment. The long-term fundamentals are intact, but short-term concerns dominate the landscape for investor
Also, see: India set to be best-performing emerging markets in 2025: Goldman Sachs