Sensex, Nifty fall 3% to post worst January in a decade; market cap erodes

Benchmarks fell over 3% each in January amid heavy FPI outflows, weak earnings growth and rupee pressure, with nearly ₹16 trillion wiped off market capitalisation

Domestic equity markets got off to a rough start in calendar year 2026, recording their weakest January performance in a decade. Both the Sensex and the Nifty fell over 3 per cent each, marking their worst January showing since 2016, when the benchmarks had declined by around 5 per cent. 

For the Sensex, this was the weakest return in any calendar month since February 2025, while for the Nifty, it was the poorest since July 2025. Broader markets also came under pressure, with the Nifty Midcap 100 and the Nifty Smallcap 100 sliding 3.4 per cent and 4.7 per cent, respectively. 

Nearly ₹16 trillion in market capitalisation was wiped out during the month — the most since February 2025 — resulting in India losing its $5-trillion market-cap tag. 

The sell-off was driven largely by sharp foreign portfolio investor (FPI) outflows amid a sustained slide in the rupee and lacklustre corporate earnings growth. FPIs sold shares worth over ₹31,000 crore ($3.5 billion) during the month, the highest since August 2025. 

In contrast, India’s emerging market peers outperformed sharply. Brazil rose 14 per cent in January, South Korea surged 24 per cent, and Taiwan gained 11 per cent, led by rallies in commodity- and technology-linked stocks. 

Back home, the Nifty Metal index emerged as the top gainer, rising 5.6 per cent despite a sharp 5.2 per cent fall on Friday, while the BSE Realty index was the worst performer, slumping 11 per cent.