MUMBAI, Jan 29, 2026, 11:32 IST
- Indian shares slip after a two-day rally, with IT and auto stocks dragging benchmarks lower
- Focus turns to Sunday’s federal budget as foreign investor selling stays in play
- Rupee hits a fresh record low near 92 per dollar, adding to risk-off mood
Indian stocks fell on Thursday, snapping a two-day climb, as investors booked profits and braced for Sunday’s federal budget. By 10:08 a.m. IST, the Nifty 50 was down 0.61% at 25,183.75 and the Sensex had dropped 0.71% to 81,763.07. Foreign portfolio investors (FPIs) have sold $4.56 billion of Indian equities in January so far, after a record $19 billion outflow in 2025. 1
The selloff matters now because the budget is the next big domestic trigger for growth expectations and corporate earnings, and it lands after a rally driven by trade-deal optimism. Dr. VK Vijayakumar, chief investment strategist at Geojit Investments, said there was “no change in the short to medium-term strategy of FIIs, which is ‘sell India’,” referring to foreign institutional investors, a term widely used in India for overseas portfolio money. 2
Pressure is not just on equities. The rupee hit an all-time low of 91.9850 per dollar, weighed down by foreign outflows and demand for hedges, Reuters reported. “The delay in the meantime remains a drag on India’s external balances,” analysts at Goldman Sachs said, forecasting the rupee at 94 per dollar over the next 12 months. 3
Autos and technology led the market lower, with ICICI Bank, Infosys, Maruti Suzuki, TCS, HDFC Bank and Hindustan Unilever among the heaviest drags, according to Upstox. The Sensex briefly slid more than 600 points and the Nifty touched 25,162 before trimming losses. Asian equities were mostly weaker, though Hong Kong’s Hang Seng rose 0.5%. 4
The pullback also followed a sharp two-day bounce, and traders are watching for signs that volatility is creeping back. Moneycontrol said the India VIX — a gauge of expected market swings — rose nearly 4% to 14.03, while Brent crude climbed about 1.1% to $69.14 a barrel. “Globally, this may result in mild market weakness as investors adjust to the expectation of no immediate rate cuts,” Rajesh Palviya, head of research at Axis Securities, said, after the U.S. Federal Reserve kept rates unchanged. 5
A handful of stocks bucked the broader drop, but the tone stayed cautious, with traders leaning on defensives and selective cyclicals rather than chasing the dip.
Overseas cues were not especially helpful. U.S. markets finished mostly flat overnight, and the Fed’s message — no rush to cut — kept the dollar and yields in focus.
Quarterly earnings are another live wire. Results from index heavyweights have been driving sharp, stock-by-stock moves, and that has made the market feel jumpier than the headline index moves suggest.
But the near-term risk is simple: if the budget fails to shift sentiment on growth or foreign flows, the selloff can deepen, especially with the rupee already under strain. The upside case is also clear — a policy surprise that improves the risk-reward for overseas investors could flip the tape quickly.
