Greenland standoff pushes markets into red; Sensex falls 1,066 points

Equity benchmarks record sharpest fall since May 13, 2025

Domestic equity benchmarks logged their steepest single-day decline in eight months on Tuesday, as an escalating standoff between the US and Europe over Greenland compounded investor unease. Sluggish corporate earnings and the absence of progress on the India-US trade deal have already been weighing on sentiment. 

The Sensex fell 1,066 points, or 1.3 per cent, to close at 82,181 while the Nifty shed 353 points, or 1.4 per cent, to end at 25,233. Both the indices ended at their lowest level in three months, and recorded their sharpest fall since May 13, 2025. Losses were deeper in the broader market, with the Nifty Midcap 100 sliding 2.6 per cent and the Nifty Smallcap 100 tumbling 2.9 per cent — their worst single-day declines since April 7, 2025. The smallcap index closed at a level last seen eight months ago. 

Overall market capitalisation of BSE-listed companies declined by ₹10 trillion to ₹456 trillion. 

The rupee fell for the fifth consecutive session, dropping to a low of 91.06 per dollar before settling at 90.98 against the previous close of 90.92. Foreign portfolio investors (FPIs) remained net sellers to the tune of ₹2,938 crore during the session while domestic institutional investors (DIIs) provided some support with net purchases of ₹3,666 crore.

 

The geopolitical dispute between the US and Europe over Greenland showed no signs of easing. Over the weekend, US President Donald Trump announced a 10 per cent tariff on European countries opposing his bid for Greenland. This tariff will take effect next month. 

The rupee-heightened risk aversion pushed investors towards safe-haven assets, lifting gold prices to $4,748 per ounce (oz) and silver to $95.3/oz. 

Indian equities were already under pressure from stagnant corporate earnings and stalled negotiations on the India-US trade agreement. 

Early results from companies reporting earnings for the third quarter (October-December) of 2025-26 (Q3FY26) underscored the weak backdrop. Combined net profits of 143 early-bird companies rose just 3.5 per cent year-on-year (Y-o-Y), sharply lower than the 11.2 per cent growth recorded in Q3FY25 and 10.1 per cent in Q2FY26, despite some benefit from goods and services tax (GST) rate cuts. Revenue growth remained in single digits. 

“Last year, about ₹1.7 trillion was pulled out of equity markets by FPIs. Foreign direct investment (FDI) is also declining. What is worrying is that uncertainty is now far higher than it was last year,” said U R Bhat, cofounder of Alphaniti Fintech. “We had expected some stabilisation after the selloff, but with the latest US-EU standoff, the chances of FPI money returning look bleak. If overseas flows continue to dry up, there is a limit to how much domestic investors can support the market,” Bhat said. 

Market breadth deteriorated to its weakest level since April 7, 2025, with the advance-decline ratio at just 0.2. As many as 3,590 stocks declined on the BSE, against only 707 advances. Barring HDFC Bank, all Sensex components ended with losses. All Nifty sectoral indices ended in the red, with NSE Realty declining the most at 5 per cent. 

From a technical perspective, analysts cautioned that near-term sentiment remains fragile. 

“The 25,370-25,400 zone will act as an immediate resistance for the Nifty. This band has turned into a key supply zone, and as long as the index trades below 25,400, the broader sentiment is likely to stay weak. Failure to reclaim this level could push the index towards the next support at 25,080,” said Sudeep Shah, head of technical and derivatives research at SBI Securities.