January proved bruising for Indian equities, with the Nifty 50 logging its worst January performance in more than a decade as a mix of global geopolitical shocks, trade tensions and uninspiring earnings dented investor confidence.
The benchmark index ended the month down 3.10 percent, or 809 points, at around 25,320, marking its sharpest January fall since 2016, when it had declined nearly 5 percent. The drop also extended the market’s losing streak to a second straight month, with the Nifty now nearly 4 percent below its record high of 26,373 touched earlier this year.
Indian equities began 2026 on a strong footing, but optimism faded quickly as geopolitical risks resurfaced. US military action against Venezuela and the capture of President Nicolás Maduro rattled global markets, while renewed tensions in West Asia added to uncertainty after US President Donald Trump warned of possible strikes on Iran.
Trade worries further weighed on sentiment. Trump revived his tariff rhetoric through January, threatening fresh duties on several countries, including Europe, South Korea and Canada. He also warned of steep penalties on nations doing business with Iran and those importing Russian crude, reviving fears of a broader global trade conflict. These developments dampened appetite for risk assets across emerging markets.
At home, December-quarter earnings offered little comfort. Corporate results have been mixed so far, with margins under pressure from high labour and input costs. Rising crude oil prices added to concerns over inflation and the fiscal outlook.
Persistent selling by foreign portfolio investors (FPIs) compounded the pressure. NSDL data shows FPIs sold Indian equities worth about ₹36,000 crore in January, following record net outflows of ₹1.66 lakh crore in 2025. The sustained outflows also dragged the rupee to fresh lows, with the currency slipping past 92 per $1 during the month.
January has traditionally been challenging for Indian markets. The Nifty 50 has closed lower in each of the past eight Januarys, underlining the seasonal weakness that resurfaced again this year.
Market participants are now pinning hopes on the upcoming Union Budget for a possible turnaround in sentiment. While no major surprises are expected, investors will closely watch capital expenditure allocations, the fiscal deficit target and measures to improve revenue visibility.
Analysts say clarity on public spending, particularly in infrastructure, defence and manufacturing, could help stabilise markets in the coming months, even as global headwinds remain strong.
(By arrangement with livemint.com)
