Mumbai, Jan 21, 2026, 12:32 (IST)
- Nifty and Sensex fell again in early trade, deepening the sharp selloff from the previous day
- Rupee plunged to a new record low amid a risk-off mood and ongoing capital outflows pressuring markets
- Investors are focused on earnings, foreign capital movements, and new U.S. tariff discussions related to Greenland
Indian shares dropped again early Wednesday, while the rupee plunged to a record low. The benchmarks had already posted their biggest single-day decline in more than eight months yesterday. By 9:56 a.m. IST, the Nifty 50 was down 0.22% at 25,178.95 and the BSE Sensex slid 0.25% to 81,991.39. “Any pullback or relief rally is likely to face stiff resistance,” said Dhupesh Dhameja, derivatives research analyst at SAMCO Securities. 1
India’s earnings season is kicking off at a tricky moment. Traders are grappling with a new wave of geopolitical risks and tariff threats, leaving the tape unsettled.
The rupee slipped beyond its previous record low of 91.0750 per dollar, hitting 91.2950 on Wednesday, marking a new all-time trough. Dhiraj Nim, FX strategist at ANZ Bank, highlighted that “the rupee’s biggest challenge is on the capital side,” citing weak inflows and sustained pressure on portfolios. 2
Traders said central bank action likely prevented the rupee from breaching its record low, after it inched toward 91 per dollar amid strong dollar demand. Sameer Karyatt, executive director and head of trading at DBS Bank India, noted that “risk-off sentiment… has led to a test of 91 levels,” and he expects the rupee to remain under pressure. 3
Tuesday’s late-session selloff hammered the Sensex, which dropped 1,065.7 points, or 1.28%, settling at 82,180.47. The Nifty 50 also took a hit, losing 353 points, or 1.38%, to close at 25,232.50, ETMarkets reported. The slide wiped out around 9.46 lakh crore rupees in market value on the BSE. Foreign institutional investors (FIIs) offloaded nearly 3,263 crore rupees worth of shares on Jan. 19, while domestic institutions stepped in to buy roughly 4,234 crore rupees. V.K. Vijayakumar, chief investment strategist at Geojit Investments, noted that “early Q3 results do not indicate a recovery in earnings growth.” 4
The chart isn’t offering much clarity. A moving average — which smooths out past prices to highlight the trend — now hovers above the Nifty. Traders often see this as a makeshift “ceiling” until the index breaks back above it.
Information technology shares have taken a hit. The sector reacts sharply to global growth cues and currency moves between the dollar and euro, which influence forecasts for export-driven companies.
Global markets remained under pressure. The MSCI Asia-Pacific index excluding Japan dropped 0.3% on Tuesday. Meanwhile, Nasdaq and S&P 500 futures were down about 1%, following U.S. President Donald Trump’s threat to impose new tariffs on eight European Union countries tied to Greenland, according to the Times of India. The 10-year U.S. Treasury yield climbed to 4.265%, its highest level since early September. Gold surged past $4,700 an ounce, and silver hovered close to record highs as investors sought safer assets, the report added. 5
The rupee’s decline adds fresh pressure on Indian assets. While a softer currency can raise import bills and make inflation harder to control, it also benefits certain exporters by increasing rupee revenue from foreign sales.
A relief bounce could still happen, though it probably hinges on a few factors: trade headlines cooling down, fewer earnings disappointments, and some indication that foreign selling is slowing. Without those, the market’s reliance shifts heavily to domestic buying and hope.
The risk runs the other way. If the rupee continues to slide and foreign investors keep pulling out, expectations around rates and liquidity could tighten. That might dull buying interest in equity dips, particularly if major earnings miss or tariff threats escalate into actual policy moves.
Investors are set to focus on the upcoming corporate earnings, daily flow data, and any signals from central banks impacting the currency market. Meanwhile, news on U.S.-EU trade tensions and Greenland has returned to the headlines, regardless of India’s stance.
