Indian Stock Markets Fall Over 2.5% As FII Selling And Global Trade Fears Rise

Indian equity markets wrapped up the week with declines exceeding 2.5 per cent, as investors turned cautious amid ongoing foreign institutional investor (FII) exits, profit-booking at higher levels, and fresh fears of global trade disruptions triggered by developments in the United States.

Sectoral performance reflected broad-based weakness, with every major index ending the week in negative territory.

Realty stocks witnessed the sharpest correction, slumping 11.33 per cent, while consumer durables, telecom, and consumer discretionary segments also fell steeply, shedding more than 5 per cent each.

The Nifty fell 2.51 per cent over the week and slipped 0.95 per cent on the final trading session to close at 25,048. The Sensex declined by 769 points, or 0.94 per cent, on Friday to finish at 81,537, posting a weekly drop of 2.43 per cent.

Broader market indices saw even steeper losses, highlighting growing risk aversion. The Nifty Midcap 100 index slid 4.58 per cent during the week, while the Nifty Smallcap 100 plunged 5.81 per cent, underperforming the benchmark indices by a wide margin.

The Bank Nifty closed the week on a weak technical footing after breaking decisively below the key support level of 58,800. Market analysts observed that while select IT and banking stocks received some early support from earnings upgrades, the mood deteriorated later in the week.

Disappointing earnings announcements and subdued performance from sector peers weighed heavily on sentiment, erasing initial gains and reinforcing a cautious outlook among investors.

Global Trade and Geopolitical Tensions Weigh on Sentiment

Rising geopolitical tensions, particularly linked to the US administration’s assertive stance on Greenland and renewed tariff threats, unsettled global financial markets. These developments contributed to a broad sell-off across Indian equities.

Adding to the pressure, higher global bond yields and uncertainty over the US Supreme Court’s review of tariffs introduced during the Donald Trump presidency further limited investors’ appetite for risk.

Since the beginning of 2026, both the Sensex and the Nifty have declined by more than 4 per cent. Foreign portfolio investors have sold shares worth over ₹36,500 crore so far this month, reflecting a sustained global risk-off trend.

Meanwhile, the Indian rupee weakened close to the 92-per-dollar mark, intensifying concerns over imported inflation and adding another layer of pressure on domestic markets.

Market participants are now looking towards the Union Budget 2026 for policy direction, along with signals from the US Federal Reserve regarding the timing and pace of interest rate cuts. Analysts suggest that stretched valuations, oversold indicators, and heavy FII short positions could spark short-term short-covering rallies.