Foreign investors continue heavy selling, domestic funds provide support.
Indian stock markets are expected to open marginally higher on Wednesday after a sharp selloff in the previous session pushed benchmark indices to their lowest levels in over three months.
Early indicators, however, suggest that investors may remain cautious as global uncertainty and foreign selling continue to weigh on sentiment.
Gift Nifty futures were trading at 25,265.5 points around 8:01 am IST, indicating that the Nifty 50 could start the day slightly above Tuesday’s close of 25,232.50. While this hints at a mild recovery at the open, traders are wary after the steep fall seen in the last session.
On Tuesday, the Nifty fell around 1.4% and the Sensex slipped about 1.3%, marking their sharpest single-day fall in more than eight months.
Both indices ended at their lowest closing levels in over three months.
From their record highs, the Nifty is now down 4.3% and the Sensex has declined 4.6%, reflecting sustained selling pressure over the past few weeks.
Global markets have been under strain due to rising trade and geopolitical concerns. Fresh worries emerged after US President Donald Trump spoke about acquiring Greenland and hinted at reviving a trade war with the European Union.
These developments have increased uncertainty and pushed investors towards safer assets.
The lack of progress on a US-India trade deal, despite several rounds of talks, has also added to investor discomfort. These global factors are weighing heavily on market mood.
The ongoing results season in India has been uneven. Some large companies have reported earnings below market expectations, which has added to the selling pressure.
Earnings misses from heavyweight companies such as Reliance Industries and ICICI Bank have made investors more cautious, especially at a time when valuations were already seen as high.
Foreign portfolio investors remain on the sell side. FPIs have sold Indian shares worth $3.23 billion in January so far, contributing to a 3.5% fall in benchmark indices this month.
In January 2026, FIIs have sold shares worth Rs 32,253.55 crore, while domestic institutional investors have bought shares worth Rs 41,976.70 crore, offering some support to the market.
On Tuesday alone, FIIs sold shares worth Rs 2,938.33 crore, showing that foreign outflows remain strong.
The weak global mood was reinforced by a sharp selloff on Wall Street overnight. All three major US indices recorded their biggest one-day fall in three months amid fears that fresh tariff threats against Europe could lead to renewed market swings.
The Dow Jones Industrial Average fell 870.74 points, or 1.76%, to 48,488.59. The S&P 500 dropped 143.15 points, or 2.06%, to 6,796.86, while the Nasdaq Composite lost 561.07 points, or 2.39%, to close at 22,954.32.
The risk-off trade pushed gold to fresh record highs, while US Treasury yields rose amid selling pressure. Bitcoin also fell more than 3%. Asian markets remained weak, with the broader regional index slipping around 0.2%.
On the technical front, the Nifty has fallen below its 20-day, 50-day and 100-day moving averages. It is now hovering just above its 200-day moving average, a level often seen as a key support for the broader trend.
Analysts say the market appears oversold in the short term, which could allow a brief relief rally. However, they caution that any rise may face strong resistance unless key levels are reclaimed.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said market volatility is likely to continue in the near term due to global uncertainty.
“The volatility in the market is likely to continue in the near-term till some clarity emerges regarding the US-Europe standoff on Greenland tariffs. Since both sides have hardened their positions, the uncertainty will continue for some time. A new development is likely today if the US Supreme Court ruling on Trump tariffs goes against President Trump. But there is no certainty on whether the ruling will happen today. If it does, the ruling might change the scenario completely overnight,” he said.
Going ahead, investors will keep a close watch on global cues, foreign fund flows and any fresh developments on trade issues. While a repeat of Tuesday’s sharp fall is not certain, the overall mood suggests that volatility is far from over and caution may continue to guide market moves in the near term.
