Sensex falls 700 points: 5 reasons why stock market is down today

Dalal Street saw a sharp fall in afternoon trade on Wednesday, with benchmark indices slipping close to 1% as selling pressure increased across sectors. Investors turned cautious as losses deepened in large-cap stocks, while IT and metal shares also stayed under pressure.

The S&P BSE Sensex fell 780.18 points to close at 84,180.96, while the NSE Nifty50 tumbled 263.90 points to end at 25,876.85. The broader market also closed in the red, reflecting weak sentiment across the board.

Market participants said weak global cues, fresh concerns over US trade action, foreign fund selling and losses in IT and metal stocks weighed on sentiment.

US TARIFF THREAT WEIGHS ON SENTIMENT

The sharp fall in the market came after reports that the US could raise tariffs on India by as much as 500% as early as next week.

This follows US President Donald Trump clearing a bipartisan sanctions bill that would allow Washington to act against countries that knowingly buy oil from Russia.

Republican Senator Lindsey Graham said in a post on X that President Trump had greenlit the legislation after a productive meeting. He added that the bill could be taken up for a vote as early as next week. The bill has been sponsored by Graham along with Democratic Senator Richard Blumenthal.

According to Graham, the proposed law would give President Trump strong leverage over countries such as India, China and Brazil. The aim is to push them to stop buying discounted Russian oil, which the US believes is helping finance Russia’s war in Ukraine. He said the timing of the bill was important, claiming that Ukraine is making concessions for peace while Russia continues its military actions.

The US has already imposed tariffs of up to 50% on Indian goods, with about half of these penalties linked to India’s purchases of Russian crude oil. Fresh fears that these tariffs could rise further unsettled investors and led to risk-off trades in equities.

FOREIGN INVESTORS CONTINUE TO SELL

Another key reason behind the fall was continued selling by foreign institutional investors. Provisional data showed that foreign investors sold Indian shares worth Rs 1528 crore on Wednesday. In January so far, they have sold shares worth $694 million, following record outflows seen in 2025.

Market experts said persistent foreign selling has capped any meaningful recovery in stocks, even though domestic fundamentals remain stable.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said that while the economy is showing strength, market sentiment remains weak.

“From the fundamental perspective, there is good news for the economy and markets. Advanced estimates project the FY26 GDP growth at an impressive 7.4%. This reflects the underlying resilience of the economy despite Trump tariffs. However, this strong fundamental is unlikely to reflect in the market very soon since the much-awaited US-India trade deal, which is critical for India’s sustained growth and macro-economic stability, is not happening. This and the continuing FII selling are impacting the market. Even though Indian large-cap valuations are fair, cheaper valuations in other markets do not offer compelling need for FIIs to buy in India,” Vijayakumar said.

NO US-INDIA TRADE DEAL IN SIGHT

Concerns over the lack of progress on a US-India trade deal also added to market pressure. Despite several rounds of talks, including four conversations between President Trump and Prime Minister Narendra Modi since August, the deal has not moved forward.

The slow pace of negotiations has put pressure on the rupee and forced the Indian government to spend around $5 billion to support exporters affected by trade uncertainty.

Adding to the confusion, President Trump has sent mixed signals in recent days. He told reporters on Tuesday that Prime Minister Modi was unhappy with him over high tariffs imposed on India. Earlier, on Sunday, Trump said Modi was aware of his displeasure over India’s Russian oil purchases and warned that tariffs could be raised very quickly, which would be very bad for India. These comments raised fresh doubts about whether the US plans to soften its stance or continue with a tough approach.

Investors are also watching developments in the US closely, as the US Supreme Court is expected to deliver rulings on argued cases when it takes the bench on Friday. Legal experts believe that the fate of tariffs imposed under a 1977 emergency powers law could be part of these rulings.

“The market mood may change if the Supreme Court verdict on the reciprocal tariffs, expected soon, goes against President Trump,” Vijayakumar added.

HEAVYWEIGHT STOCKS DRAG SENSEX LOWER

Selling in heavyweight stocks played a major role in dragging the Sensex down. Several large companies were trading in the red during the afternoon session. Titan Company slipped 0.18%, while Hindustan Unilever fell 0.18%. HDFC Bank was down 0.33% and ITC declined 0.40%. Mahindra and Mahindra eased 0.53%, while Maruti Suzuki India lost 0.68%.

Axis Bank fell 0.69%, Sun Pharmaceutical Industries slipped 0.72% and UltraTech Cement declined 0.74%. Kotak Mahindra Bank was down 0.82% and Tata Motors DVR dropped 0.99%. State Bank of India fell 1.01% and Trent declined 1.07%. NTPC was down 1.09% and Bharti Airtel slipped 1.16%.

Asian Paints fell 1.25%, Larsen and Toubro declined 1.39% and Infosys lost 1.39%. Power Grid Corporation of India was down 1.44%, Tata Steel slipped 1.52% and Bajaj Finserv fell 1.55%. Tech Mahindra declined 2.04%, Reliance Industries fell 2.10% and Tata Consultancy Services dropped 2.21%.

IT AND METAL STOCKS SEE SHARP LOSSES

IT and metal stocks were among the worst hit sectors in afternoon trade. The Nifty IT index fell around 1.5%, with all major IT stocks trading lower. Wipro was the biggest loser, down 2.46%, followed by Tata Consultancy Services, which fell 2.20%. Oracle Financial Services Software slipped 2.10% and Tech Mahindra declined 2.09%. Coforge fell 2.02%, while Mphasis was down 1.81%.

Metal stocks also saw heavy selling. The Nifty Metal index dropped about 3%, with every major stock in the sector in the red. Hindustan Zinc fell 5.62% and Jindal Stainless slipped 5.37%. Hindustan Copper declined 4.63% and National Aluminium Company fell 4.48%. Jindal Steel and Power was down 4.27% and NMDC slipped 4.05%.

Vedanta declined 3.57%, Lloyds Metals and Energy fell 3.56% and Hindalco Industries dropped 3.51%. Welspun Corp slipped 3.18%. Steel Authority of India fell 2.70%, Adani Enterprises declined 2.37% and JSW Steel was down 2.34%.

Market experts said the near-term direction of the market will depend on global cues, clarity on US trade policy and whether foreign investors slow down their selling in the coming sessions.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

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