Why Markets Fell Today?

The domestic stock market opened positively on January 23, but then fell into a downward trend. The BSE Sensex fell by close to 700 points to 81,636.15 during the afternoon session. The NSE Nifty similarly dropped by around 210 points to be priced at 25,077.54, compared with a value just under 25,100 earlier in the session.

The BSE MidCap was lower by 1.17%, and the BSE SmallCap was down by 1.78%, both of which indicated the broadness of selling pressure in the markets. There was ample profit booking taking place over a wide range of sectors based on the gains of recent times.

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Several factors are hanging over market sentiment right now:

Foreign Fund Selling Persists

FIIs sold off shares worth ₹2,549.80 crores on Thursday, and this is the 13th consecutive day of selling in January. For the full month, FIIs have only net bought once (on January 2). 

On the back of the cheap alternative opportunities that are available in the broader global market, the earnings momentum for FIIs is the most important guide. Due to continued selling pressure, the markets remain net short, despite the positive news from time to time, which will continue to affect market performance.

Results of the quarter will affect the broader segments.

Earnings Disappoint Key Players

The subdued Q3 earnings of ICICI Bank and HCL Technologies, which heavily influence the index, are creating uncertainty over their future outlook as the weak performance of large capitalisation companies leads to continued scepticism regarding future profit growth.

The 0.5% recovery on Thursday after the announcement of a less aggressive tariff policy against Europe will be short-lived, as this week's market remains down 1.5%.

The shifting global political climate continues to warrant cautious attention.

Macro and Group Pressures Mount

Brent crude at $64.57 (+0.8%) is fueling fears of increasing inflation and trade deficit. With rising oil prices, profit margins are being squeezed, and the economic outlook remains cloudy.

Selling pressure on the Adani Group stocks intensified following the U.S. SEC issuing summons against Gautam Adani and Sagar Adani for their alleged involvement in a fraud and bribery scheme. Many investors are losing faith in the Adani Group due to the ongoing legal situation.