Mumbai, Jan 30, 2026, 16:28 IST
- Indian benchmarks ended January with their steepest monthly fall since February 2025, weighed by sustained foreign selling.
- The rupee hit a record low near 92 per dollar, keeping pressure on risk assets into the weekend.
- Finance Minister Nirmala Sitharaman presents the federal budget on Sunday in a rare special market session.
Indian equities closed lower on Friday and logged their biggest monthly decline in nearly a year, as foreign selling and a sliding rupee kept investors cautious ahead of Sunday’s federal budget. The Nifty 50 ended January down 3.1%, while the BSE Sensex fell 3.5%.
The timing matters. India’s budget lands with the currency under stress and crude oil climbing, forcing investors to weigh growth support against fiscal discipline. Markets will open on Sunday for a special session as Sitharaman delivers the budget for 2026-27.
Foreign portfolio investors (FPIs) — overseas funds that buy Indian shares — sold about $4 billion of equities in January, Reuters reported. “Earnings have been anaemic,” said Sat Duhra, a portfolio manager at Janus Henderson Investors, adding there was little to pull foreign money at current valuations. Reuters
The day itself was choppy. The Sensex slid as much as 625 points in early trade and the Nifty dropped about 205 points, before trimming losses into the close. Roughly 4 trillion rupees in investor wealth was wiped out within the first 15 minutes, the Economic Times reported.
Budget nerves did most of the work, but not alone. “The spike in Brent crude to near $70 is a headwind for Indian macros,” said V.K. Vijayakumar, chief investment strategist at Geojit Investments, pointing to tariff threats and geopolitics as a drag on sentiment. The Economic Times
The currency story has turned into a macro headache. The rupee hit a record low of 91.9875 per dollar on Friday and posted its worst month since September 2022, despite Reserve Bank of India intervention, Reuters reported. Goldman Sachs expects the fiscal deficit to be guided toward 4.1%-4.3% of GDP, and said the government may “lean towards the upper end of the range” to keep room to support affected sectors. Reuters
Oil has not helped. Prices hit a five-month high on worries Middle East tensions could disrupt supply, Indian media reported, a worry for India as a net oil importer. Higher oil typically feeds into inflation and raises costs for companies.
Global rates and politics are another layer. The U.S. Federal Reserve held its benchmark target range at 3.50%–3.75% this week, and markets have also been watching for U.S. President Donald Trump’s pick for the next Fed chair, Reuters reported.
Stock moves showed the strain. FMCG was among the worst-hit sectors in January, while ITC sank 20.1% in its steepest monthly drop in more than 25 years on worries cigarette excise duties could bite earnings after Feb. 1, Reuters said. Reliance Industries fell 11.1% over the month, and metals slid 5.2% on Friday as profit-taking set in.
Thursday offered a preview of how jumpy the tape has become. Markets recovered after an early drop as the government’s Economic Survey — the annual pre-budget report card and outlook — projected 6.8%-7.2% growth for the next fiscal year, Reuters reported. Sitharaman called the outlook “one of steady growth amid global uncertainty,” while Mitesh Dalal at Sanctum Wealth said trade-deal ambiguity and foreign outflows were weighing on both the rupee and equities. Reuters
But the next move is not locked in. If the budget leans harder on tax hikes or signals tighter spending, volatility could spike again, especially with the rupee already stretched and oil rising. A cleaner message on fiscal discipline, or measures that steady foreign flows, could just as easily take the edge off.
One sign of nerves: the India VIX, the market’s volatility gauge, ended higher on Friday, reflecting demand for protection into the budget session.
