Quote on Weekly Note Jan 10 by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd
Quote on Weekly Note Jan 10 by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd
Markets Slide Sharply on Trade Fears and Sustained FII Selling
Market Summary
Markets witnessed a sharp sell-off during the week, with benchmark indices ending firmly in the red amid weak global cues and heightened uncertainty. Sentiment remained negative throughout the week and selling pressure intensified in the final sessions. Consequently, the Sensex declined 2.55% to close at 83,576.24, while the Nifty fell 2.45% to 25,683.30, marking one of the steepest weekly declines in recent months. Broader markets underperformed the frontline indices, underscoring a pronounced risk-off environment.
Key Market Drivers
Global developments dominated market sentiment. Fresh concerns over sharply higher US tariffs on Indian exports, along with persistent uncertainty surrounding India–US trade relations, triggered widespread risk aversion. Geopolitical tensions involving the US and Venezuela further dampened investor confidence. Sustained selling by foreign institutional investors added to the pressure, with FIIs remaining net sellers in the equity segment throughout the week.
On the domestic front, macroeconomic indicators were largely supportive but failed to offset global headwinds. The NSO projected India’s GDP growth at 7.4% for FY26, supported by strong performance in services and manufacturing. Ind-Ra forecast GDP growth of 6.9% for FY27, highlighting reforms such as GST, income tax cuts, and FTAs as key growth drivers. Services sector activity moderated in December but remained comfortably in expansion territory, while RBI data showed acceleration in bank credit growth to industry. Retail vehicle sales also rose strongly in 2025, reflecting resilient underlying demand.
Sectoral Snapshot
The sell-off was broad-based, with cyclical and policy-sensitive sectors bearing the brunt of the correction. Energy, metals, and realty stocks emerged as the top laggards, weighed down by concerns over global trade disruptions, commodity demand uncertainty, and risk-off positioning. Banking stocks also declined, with Bank Nifty underperforming the broader market amid cautious sentiment and persistent FII selling. Pharma and IT stocks saw relatively limited downside but still ended lower, tracking weakness in global markets and a cautious outlook for overseas demand.
Key Events to Watch
The coming week marks the start of the earnings season alongside a busy macroeconomic calendar. Investors will closely track India’s CPI inflation, WPI inflation, trade balance, and foreign exchange reserves data for cues on inflation trends and external stability. Quarterly results from major companies across IT, banking, financials, and energy sectors will also be in focus.
Globally, markets will keenly watch developments around the US Supreme Court verdict on the legality of Trump-era tariffs, which could act as a key sentiment driver. Ongoing geopolitical developments will also remain on investors’ radar.
Technical Outlook
Nifty - The sharp decline has disrupted the Nifty’s short-term uptrend, with the index now retesting its medium-term support near the 100-day EMA around the 25,600 level. A decisive break below this zone could extend the decline toward 25,300 and subsequently the key long-term support near the 200-day EMA around 25,150. While momentum indicators point to oversold conditions that may trigger a short-term technical bounce, any recovery is likely to face stiff resistance near previous breakdown levels. On the upside, reclaiming the 20-day EMA around 26,000 will be challenging, with the next major hurdle placed near 26,200.
Bank Nifty- It has also retreated from record highs but continues to show relatively better resilience. The previous swing low around 58,700 remains a critical support; a break below this could weaken the short-term structure and drag the index toward the 57,800–58,000 zone. On the upside, the 58,800–60,500 range is expected to act as a strong resistance band.
Broader Indices- Market breadth has deteriorated meaningfully, with midcap and smallcap indices underperforming the benchmarks, indicating distribution and elevated risk aversion. However, midcaps appear relatively stronger, and quality names may attract selective buying on declines.
Strategy Ahead
In the current environment of heightened volatility and global uncertainty, a cautious and disciplined approach is advisable. While bargain hunting could lead to intermittent rebounds after the sharp correction, sustained upside is likely to remain capped until greater clarity emerges on earnings, global trade developments, and FII flows. Investors should focus on capital preservation, maintain higher exposure to quality large-cap stocks, and avoid aggressive positions in high-beta or leveraged names. Traders may look to tactically participate in short-term technical rebounds but should adhere to strict risk management and stop-loss discipline. Selectively positioning in domestically driven sectors with strong balance sheets may offer relative stability, while export- and commodity-linked stocks could remain vulnerable to further global shocks.
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