Sensex Slips 730 Points: 6 Factors Driving the Market Fall

Indian benchmark indices extended their losing streak for a fourth consecutive day on Thursday, January 8, 2026, amid a broad-based sell-off. The S&P BSE Sensex fell 730 points, or 0.85%, to an intraday low of 84,230.95, while the NSE Nifty 50 slipped 256 points, or 0.98%, to 25,884.15. The decline was driven by a combination of negative global cues, persistent foreign fund outflows, rising geopolitical uncertainty, and heavy selling in metal stocks.

Persistent Foreign Investor Selling

One of the primary drivers behind the market's decline has been the consistent selling pressure from Foreign Institutional Investors (FIIs). In January alone, FIIs have offloaded Indian equities worth ₹4,650.39 crore. This trend continued on Wednesday, with FIIs selling shares worth ₹1,527.71 crore, marking the third straight session of outflows. This sustained withdrawal of foreign capital has dampened investor sentiment and created liquidity pressure in the market. Analysts note that this follows record outflows in 2025, indicating a prolonged period of risk aversion from foreign investors towards Indian equities.

Geopolitical Tensions and Tariff Threats

Global geopolitical concerns have intensified, adding to market volatility. A significant development is a bill backed by US President Donald Trump that proposes a tariff of at least 500% on countries purchasing Russian oil. This move puts pressure on major importers like India and China, creating uncertainty around trade relationships and potential economic repercussions. While some analysts believe the direct economic impact might be limited, the sentiment impact is significant.

Adding to the unease, a major US military operation in Venezuela over the weekend resulted in the capture of its president. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted that such unprecedented geopolitical developments call for a prudent approach from investors, suggesting an increase in cash holdings to navigate the heightened volatility.

Weak Global Market Cues

Indian markets mirrored a downturn seen across Asia. Mainland China’s CSI 300 was down 0.92%, Hong Kong’s Hang Seng index fell 1.71%, and Japan’s Nikkei 225 declined by 1.64%. European markets also opened lower, with the FTSE 100 falling 0.74%. This widespread risk-off sentiment in global markets, influenced by trade and geopolitical risks, created a negative backdrop for domestic equities.

Heavy Selling in Metal Stocks

On the sectoral front, the Nifty Metal index was the top laggard, falling over 3% due to significant profit-booking. Several major metal companies experienced sharp declines. Hindustan Zinc and National Aluminium Company (Nalco) were the worst performers, with their stock prices sliding by 6% in intraday trading. Other prominent names such as Jindal Stainless, Vedanta, Hindustan Copper, and JSW Steel also saw their shares drop between 4% and 5%. This sector-wide sell-off contributed significantly to the Nifty's overall decline.

Weekly Derivatives Expiry

Thursday also marked the weekly expiry for Sensex derivatives contracts. Such sessions are typically characterized by increased volatility and higher trading volumes. Traders often unwind or roll over their future and options (F&O) positions, leading to sharper price movements. This technical factor likely amplified the selling pressure already present in the market.

Broader Market Under Pressure

The negative sentiment was not confined to the benchmark indices. Broader market indices also faced selling pressure, indicating that the downturn was widespread. The Nifty Midcap 100 index fell by 1.32%, and the Nifty Smallcap 100 index was down by 1.1%. The market breadth was negative, with approximately 1,767 stocks declining on the BSE compared to 1,479 advancing stocks.

Analyst Outlook

Despite the near-term weakness, some analysts maintain a cautiously optimistic long-term view. Devarsh Vakil, Head of Prime Research at HDFC Securities, noted that the broader positional trend remains bullish, supported by a pattern of higher tops and bottoms on daily charts. From a technical standpoint, he identified the recent swing high of 26,373 as an immediate resistance level for the Nifty 50, while the 26,000 mark is expected to act as a strong near-term support.

Conclusion

The sharp decline in Indian markets on January 8 was the result of multiple converging factors. Sustained FII selling, heightened geopolitical risks, weak global cues, and a sharp correction in metal stocks created a perfect storm for the bears. The added volatility from the weekly derivatives expiry exacerbated the fall. Investors are advised to remain cautious as market volatility is expected to continue in the near term, driven by both domestic and international developments.