Nifty Eyes Rebound After ₹10 Lakh Crore Market Rout in 2026

Introduction

The Indian stock market is navigating a period of intense volatility as bulls attempt to stage a comeback following a severe sell-off. The previous session witnessed the worst single-day drop in nine months, erasing a staggering ₹10 lakh crore in investor wealth. The benchmark Nifty 50 index is now precariously poised near critical technical support levels, with market participants closely watching for signs of a sustainable recovery or further declines.

The ₹10 Lakh Crore Sell-Off

Tuesday's trading session was marked by a broad-based market crash that sent shockwaves through Dalal Street. The Sensex plummeted by 1,066 points, while the Nifty 50 closed below the 25,250 mark, hitting a three-month low. This sharp correction was triggered by a confluence of factors, including the breach of key technical support zones, persistent global tariff uncertainties, and a negative handover from Wall Street. The market capitalization of all listed firms on the NSE consequently fell below the $1 trillion mark for the first time in eight months, highlighting the scale of the investor wealth erosion.

Key Technical Levels in Focus

From a technical standpoint, the market is at a critical juncture. The Nifty 50 has slipped below its 20, 50, and 100-day exponential moving averages (EMAs), indicating muted momentum. The last line of defence for the index is now its 200-Day Moving Average (DMA), located near the 25,100 mark. Tuesday's low of 25,171 will be a crucial level to monitor, as a sustained breach could invite further corrective pressure, potentially dragging the index towards 25,300 or lower. The Nifty Put-Call Ratio (PCR), a measure of market sentiment, has declined to 0.72 from 0.77, suggesting an increase in bearish sentiment.

Performance of Nifty Bank and Broader Markets

The Nifty Bank index has been a key driver of the market's direction. Its failure to defend the 59,500 level on Tuesday raised concerns among traders. The banking index's performance will be pivotal for any potential rebound in the headline indices. The broader markets have also faced significant selling pressure. The Nifty Midcap 100 index fell below its 100-DMA, while the small-cap index broke below its 200-DMA, signaling widespread weakness beyond the large-cap space.

Market Performance Summary

Corporate Earnings and Fund Raising Activities

Amid the market turmoil, the third-quarter earnings season is gathering pace. Market participants are reacting to results from companies like AU Small Finance Bank, Persistent Systems, and United Spirits. Today, several other major companies, including Bank of India, Dr. Reddy's, and HPCL, are scheduled to announce their quarterly results. Additionally, companies such as Baazar Style Retail, Cupid, and Restaurant Brands Asia are in focus due to their respective fund-raising announcements, which could influence their stock performance.

Global Cues and FII Activity

Global market trends continue to influence domestic sentiment. The overnight sell-off on Wall Street, with major indices like the Dow Jones and Nasdaq closing significantly lower, has been largely priced in by Indian markets. However, ongoing geopolitical tensions and tariff policies remain a source of uncertainty. Foreign Institutional Investors (FIIs) have been net sellers, contributing to the downward pressure. On January 19, FIIs sold a net of ₹3,262.82 crore, although this was offset by net purchases of ₹4,234.3 crore by Domestic Institutional Investors (DIIs).

Market Outlook

The immediate outlook for the market remains cautious. While a rebound from oversold levels is possible, sustaining it will require positive triggers, such as strong corporate earnings or favorable global cues. The technical setup suggests that as long as the Nifty holds above the critical 25,100-25,200 support zone, dips may present buying opportunities. However, a decisive break below this level could signal a deeper correction. Investors will be closely watching the outcome of corporate results and global events to gauge the market's next direction.