Indian Stock Market Tumbles on Multiple Headwinds
The Indian stock market experienced a severe downturn on Tuesday. A combination of disappointing corporate earnings, rising geopolitical tensions, and persistent foreign investor selling triggered a broad-based selloff.
Market Indices Slide to Multi-Month Lows
Today's crash pushed the benchmark indices to their lowest levels in over three months. The Sensex fell by 1.28 percent. The Nifty dropped by 1.38 percent.
The selloff hit the broader market even harder. Small-cap and mid-cap indices plunged more than 2.5 percent each. Intense selling pressure on Dalal Street erased investor wealth worth ₹9,86,093 crore.
Key Factors Behind the Market Fall
Several specific issues contributed to the sharp decline.
Weak Corporate Earnings:A majority of Nifty 50 companies reported disappointing December-quarter results. Reliance Industries and ICICI Bank missed analyst estimates. IT services players saw profits hit by new labour codes.
Geopolitical Tensions:The global trade environment worsened. US President Donald Trump threatened tariffs on eight European Union members. This followed opposition to his bid to purchase Greenland.
Foreign Portfolio Outflows:Pressure intensified due to foreign institutional investor (FII) selling. Data from NSDL shows FIIs sold Indian stocks worth ₹29,135 crore as of January 19. This marks the worst monthly outflow since August, when they sold around ₹35,000 crore in equities.
Expert Views: Buying Opportunity or Caution?
Analysts are debating whether this market drawdown presents a buying chance or warrants caution.
G Chokkalingam, Founder and Head of Research at Equinomics Research, spoke to Mint. He noted valuations in small-caps and mid-caps have become extremely attractive after falling 30-50 percent from record highs. However, he highlighted liquidity concerns and the ongoing tariff war as key issues.
Chokkalingam expects the Indian stock market to remain weak until March. Yet, he calls this a very attractive time to buy stocks in a phased manner.
He pointed out that massive promoter selling and a robust IPO market have drained liquidity from the secondary market. The tariff war is also driving FIIs away from Indian equities.
Gurmeet Singh Chawla, Director at Master Capital Services, shared similar views. He said corrections of this nature should be seen as a healthy reset, not a structural warning.
"Corrections are an integral part of equity markets," Chawla opined. "They often create the very opportunities long-term investors wait for."
The expert stated that gradual accumulation during corrections has historically delivered superior returns.
"Over full market cycles, this approach has repeatedly differentiated informed investors," he added. "The benefits of compounding work most powerfully on investments made during periods of correction rather than market highs."
According to Chokkalingam, defensive investors should focus on the Sensex and Nifty. For those aiming to build wealth over the next one to two years, he sees opportunity in small and mid-cap stocks.
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.
