Indian Stocks Plunge: Earnings, Tensions Hit Market

Indian stock market indices, including the Sensex and Nifty, recently reached over three-month lows, experiencing a broad-based selloff. This downturn resulted in a significant erosion of investor wealth, with losses amounting to ₹9,86,093 crore. Several factors contributed to the decline, including subdued corporate earnings, escalating geopolitical tensions, and substantial outflows by foreign investors.

Foreign portfolio investors (FPIs) have divested Indian equities worth ₹29,135 crore as of January 19, 2026, representing the most significant monthly outflows since August 2025. These outflows are partly attributed to global trade environment concerns, such as threatened tariffs and opposition to international business dealings.

Market analysts suggest that while small-cap and mid-cap valuations have become attractive following significant drops, concerns about liquidity and ongoing trade disputes persist. Experts anticipate continued weakness in the Indian stock market until March 2026, but also see this period as an opportune time for phased investment, particularly in small and mid-cap stocks for long-term wealth creation.