Market Performance: Early Gains Fade as Selling Pressure Returns
The Indian equity markets started the day on a strong note but couldn’t hold on.
The Sensex and Nifty opened higher in early trade, riding initial optimism. The Sensex jumped 362 points to touch an intraday high of 81,899.83, while the Nifty climbed 136 points to 25,184.95.
That momentum didn’t last long.
As the session progressed, selling pressure kicked in. By around 11:10 am, the Sensex slipped to 81,306.55, down 231 points. The Nifty hovered near the psychological 25,000 mark, trading at 25,002.50, lower by 46 points.
Market breadth remained weak:
- 1,447 shares advanced
- 2,273 shares declined
- 152 shares stayed unchanged
This imbalance clearly showed risk appetite cooling as the day unfolded.
Main News: Why Sensex and Nifty Turned Red?
The market’s pullback was driven by three clear factors, all unfolding simultaneously during the session.
Auto Stocks Under Pressure After Trade Deal Reports
Auto stocks saw sharp profit booking, which weighed heavily on the benchmarks.
Reports around India potentially cutting tariffs on European car imports triggered selling across the auto pack. The news indicated tariffs may be reduced to 40% from levels as high as 110%, as part of an ongoing trade agreement with the European Union.
Key points from the development:
- Tariff cuts may apply to cars priced above 15,000 euros
- Duty reduction could happen immediately for a limited number of imports
- The trade agreement may be finalised as early as January 27
The reaction in stocks was swift:
- Mahindra & Mahindra fell over 5%, hitting its lowest level since August 2025
- The Nifty Auto index declined about 2.2%
- Selling pressure spilled over to other auto names as well
Auto stocks being heavyweight contributors, their fall dragged both Sensex and Nifty lower.
Persistent FII Selling Weighs on Sentiment
Foreign institutional investors continued to remain on the sell side, adding pressure to the market.
On the last reported trading session:
- FIIs sold equities worth ₹4,113.38 crore
- This extended their selling streak to 14 sessions in January
- FIIs were net buyers only once this month, on January 2, buying shares worth ₹289.80 crore
Apart from that single session, foreign investors have consistently trimmed exposure. This steady outflow has kept sentiment fragile and limited any meaningful upside in the Sensex and Nifty.
India VIX Rises, Signaling Higher Market Uncertainty
Another clear signal came from the volatility index.
The India VIX jumped over 8% to 15.38. A rising VIX generally reflects growing uncertainty among market participants and often leads to cautious trading behavior.
Higher volatility levels tend to:
- Increase intraday swings
- Encourage short-term profit booking
- Pressure equity indices during uncertain phases
This spike in volatility added to the cautious tone across Dalal Street.
Company Movement Snapshot: Losers Outnumber Gainers
Stock-specific action also told a clear story.
Major laggards in the Nifty50 included:
- Kotak Mahindra Bank
- Mahindra & Mahindra
- Maruti Suzuki India
These stocks declined up to 4%.
On the upside:
These names gained up to 6%, providing limited support to the indices.
However, gains were not broad-based, which kept the overall market under pressure.
Summary: Sensex and Nifty Struggle Near Key Levels
To sum it up, the Sensex and Nifty lost momentum after a strong start, weighed down by sector-specific pressure and cautious global positioning.
Here’s what shaped the day:
- Early gains erased as auto stocks declined sharply
- Continued foreign fund outflows dampened sentiment
- Rising India VIX highlighted increasing uncertainty
- Market breadth stayed negative, signaling broad selling
The Nifty holding near the 25,000 level reflects hesitation rather than strength. Until selling pressure eases and volatility cools, markets may continue to trade with a cautious undertone.
This phase underlines how quickly sentiment can turn — even on days that begin with optimism.
Source: Moneycontrol
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