Stock market: Greenland, Trump tariffs & Rs 29K crore FPI outflows in Jan; what's ahead?
Nifty and Sensex have fallen 3.5 per cent each in January. Foreign outflows during the same period stood at Rs 29,135 crore. This is the worst monthly FPI figure since August 2025 (Rs 34,993 crore).
- Jan 20, 2026,
- Updated Jan 20, 2026 4:48 PM IST
Aggressive and unpredictable tariff actions by Donald Trump-led US administration have roiled global equity markets, triggering a sharp risk-off shift as investors moved towards safe-haven assets such as gold and silver. The rupee weakened and domestic equities declined, while delays in the India-US trade agreement weighed on sentiment. These factors resulted in foreign equity outflows of Rs 29,135 crore in the first month of 2026 so far.
For January, Nifty and Sensex have fallen 3.5 per cent each. Foreign outflows during the same period stood at Rs 29,135 crore. This is the worst monthly FPI figure since August 2025 (Rs 34,993 crore). Rupee fell to a record low of 91 against dollar earlier today.
"Market volatility is expected to persist until clarity emerges on the US–Europe tariff standoff over Greenland, with geopolitical and geo-economic factors continuing to drive market direction," said Bajaj Broking in a note.
While a India-US trade deal has already delayed, Trump's tariff warning to European countries over the Greenland issue signals a more overt use of trade policy as a geopolitical tool, reviving risks of US-EU trade escalation.
Radhika Rao, Executive Director and Senior Economist at DBS Bank said elevated geopolitical risk is seen keeping financial markets cautious, with near-term pressure on risk assets and dollar positioning.
DBS FX Strategist observed that currency markets are currently navigating a complex landscape of diverse developments both within and outside the US, leading to a trading environment that is cautiously defensive in the short term but strategically unsettled.
Recently, Trump announced fresh tariffs on eight European countries, in response to their move to send troops to Greenland. This includes France, Germany, Sweden, Finland, the Netherlands, Denmark and non-EU members UK and Norway.
This is amid a row over US plans to take over Denmark’s territory. Trump threatened a 10 per cent tariff from February, which will increase to 25 per cent until a deal for his government to take over Greenland is secured.
"These developments have introduced new complexities into the trade and diplomatic relationship between the US and EU, suggesting a likely resurgence in trade tensions, where tariffs now carry political implications," Rao of DBS Bank said.
In a note, she said future trajectory of this situation remains uncertain, with possibilities ranging from strong military action to potential compromises or de-escalation driven by international or domestic political pressures.
"Fresh threats by US President Donald Trump to impose additional tariffs on European nations opposing the U.S. move to take control of Greenland have triggered another bout of global equity selling, with Indian markets also witnessing broad-based pressure," said Ponmudi R, CEO of Enrich Money.
The latest US tariffs will likely come under the purview of the IEEPA umbrella which is being reviewed by the US Supreme Court and a ruling is likely on January 21.
Before this, the US capturing of Venezuela’s President Nicolás Maduro on January 3 and taking him to face charges in a US court, including narco-terrorism conspiracy and cocaine importation conspiracy, took markets by surprise.
Aggressive and unpredictable tariff actions by Donald Trump-led US administration have roiled global equity markets, triggering a sharp risk-off shift as investors moved towards safe-haven assets such as gold and silver. The rupee weakened and domestic equities declined, while delays in the India-US trade agreement weighed on sentiment. These factors resulted in foreign equity outflows of Rs 29,135 crore in the first month of 2026 so far.
For January, Nifty and Sensex have fallen 3.5 per cent each. Foreign outflows during the same period stood at Rs 29,135 crore. This is the worst monthly FPI figure since August 2025 (Rs 34,993 crore). Rupee fell to a record low of 91 against dollar earlier today.
"Market volatility is expected to persist until clarity emerges on the US–Europe tariff standoff over Greenland, with geopolitical and geo-economic factors continuing to drive market direction," said Bajaj Broking in a note.
While a India-US trade deal has already delayed, Trump's tariff warning to European countries over the Greenland issue signals a more overt use of trade policy as a geopolitical tool, reviving risks of US-EU trade escalation.
Radhika Rao, Executive Director and Senior Economist at DBS Bank said elevated geopolitical risk is seen keeping financial markets cautious, with near-term pressure on risk assets and dollar positioning.
DBS FX Strategist observed that currency markets are currently navigating a complex landscape of diverse developments both within and outside the US, leading to a trading environment that is cautiously defensive in the short term but strategically unsettled.
Recently, Trump announced fresh tariffs on eight European countries, in response to their move to send troops to Greenland. This includes France, Germany, Sweden, Finland, the Netherlands, Denmark and non-EU members UK and Norway.
This is amid a row over US plans to take over Denmark’s territory. Trump threatened a 10 per cent tariff from February, which will increase to 25 per cent until a deal for his government to take over Greenland is secured.
"These developments have introduced new complexities into the trade and diplomatic relationship between the US and EU, suggesting a likely resurgence in trade tensions, where tariffs now carry political implications," Rao of DBS Bank said.
In a note, she said future trajectory of this situation remains uncertain, with possibilities ranging from strong military action to potential compromises or de-escalation driven by international or domestic political pressures.
"Fresh threats by US President Donald Trump to impose additional tariffs on European nations opposing the U.S. move to take control of Greenland have triggered another bout of global equity selling, with Indian markets also witnessing broad-based pressure," said Ponmudi R, CEO of Enrich Money.
The latest US tariffs will likely come under the purview of the IEEPA umbrella which is being reviewed by the US Supreme Court and a ruling is likely on January 21.
Before this, the US capturing of Venezuela’s President Nicolás Maduro on January 3 and taking him to face charges in a US court, including narco-terrorism conspiracy and cocaine importation conspiracy, took markets by surprise.