Sensex crashes 2,200 points in 5 days- What's driving the Indian stock market down? Explained

Frontline indices the Sensex and the Nifty 50 extended losses for the fifth consecutive session on Friday, January 9, as persisting concerns over foreign capital outflow, geopolitical tensions, and caution ahead of the Q3 earnings kept investors away from riskier equities.

The Sensex crashed nearly 800 points, or 1%, to an intraday low of 83,402, while the Nifty 50, too, dropped by 1% to an intraday low of 25,623.

Finally, the Sensex ended with a loss of 605 points, or 0.72%, at 83,576.24, while the Nifty 50 settled 194 points, or 0.75%, lower at 25,683.30. The BSE Midcap index crashed 0.90%, while the Smallcap index plunged 1.74%.

In these five sessions, the Sensex has crashed 2,186 points, or 2.5%, while the Nifty 50 has also fallen by 2.5%. Investors' wealth was eroded by ₹13.5 lakh crore in five sessions as the cumulative market capitalisation of BSE-listed firms dropped to ₹467.75 lakh crore from ₹481.25 lakh crore on January 2.

Why is the Indian stock market falling?

Here are five key factors that are driving the domestic market down:

1. Focus on the US Supreme Court

The US Supreme Court was expected to issue its order on Trump's “Liberation Day” tariffs on Friday, January 9. However, it did not issue a ruling on Friday. The US Supreme Court may issue its next round of rulings on January 14

If the Court rules against Trump, it would come as a major relief for the markets. However, a verdict in his favour could further dampen market sentiment, as there are apprehensions that it may embolden him to pursue more aggressive tariff measures.

2. Growing concerns over fresh tariffs

While all eyes are on the Supreme Court verdict, investors are concerned over the prospects of an increase in US tariffs after Republican Senator Lindsey Graham, on January 7, said that Trump had backed the Russia sanctions bill, which could raise US tariffs to at least 500% on countries that buy Russian oil.

3. Caution ahead of Q3 earnings

Domestically, investors await the announcement of corporate earnings. Retail player DMart will declare its December quarter numbers on Saturday, while IT majors TCS and HCL Tech will report their earnings on Monday.

After several quarters of weak earnings, experts anticipate a revival in earnings from Q3 onwards. However, if the numbers fail to meet expectations, it will be a huge negative for the market and may accelerate foreign capital outflow.

4. FIIs' relentless selling

Foreign institutional investors (FIIs) have been selling Indian stocks since July last year. In January till the 8th, they have sold off Indian equities worth over ₹8,000 crore in the ash segment.

Foreign capital outflow was the key reason behind the market's modest returns in 2025. If the trend does not reverse, experts fear that the domestic market's gains may remain modest even in 2026.

5. Persisting uncertainty over the India-US trade deal

Persisting uncertainties over an India-US trade deal are also contributing to the market downtrend. Contrary to the hopes that India will be among the first countries to finalise a trade deal with the US, both countries have failed to secure a deal despite several rounds of negotiations.

According to Vinod Nair, the head of research at Geojit Investments, a delayed India-US trade deal can weigh on market sentiment, prolonging India’s underperformance.

Apart from these five factors, geopolitical uncertainties, crude oil price volatility and rupee's weakness are also contributing to the market's fall.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.