Sensex, Nifty resume fall, down nearly 1%: Key reasons behind today's drop

Indian equity benchmarks declined on Friday after a single-day halt, with the 30-share BSE Sensex pack and the NSE Nifty index slipping nearly 1 per cent, each. Selling pressure was not limited to frontline indices, as the broader market also witnessed sharp weakness. Mid-cap and small-cap indices traded deep in the red, shedding close to 2 per cent, respectively.

Market participants remained cautious amid continued foreign fund outflow. According to NSE data, foreign institutional investors (FIIs) sold shares worth Rs 2,144.06 crore in the previous session. In contrast, domestic institutional investors (DIIs) provided some support, buying equities worth Rs 3,877.78 crore.

VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said, "The pattern of sustained FII selling and DII buying, which dominated the market trend in 2025, has been continuing in 2026, too, so far. Whether this pattern will change with FIIs also turning buyers is the important question that investors have been asking for some time now. Partly, the Budget to be presented on February 1 will offer some insights, if there are some market-friendly proposals."

He also said, "The FII stance towards India will be determined by the trend in India's corporate earnings. Higher earnings growth alone can ensure sustained buying by FIIs since they have the option to invest in other markets where valuations are cheaper and earnings are better. Since earnings growth is some time away and the FII selling strategy is expected to continue, preempting any healthy rally, the market is heavily net short. FIIs are adding to the short positions on every rally triggered by some positive news. The broader market, where FII presence is limited, is likely to witness action in response to Q3 results."

Adding to the cautious outlook, Kranthi Bathini, Director – Equity Strategy at WealthMills Securities, said, "Overall, the market is in a downtrend. But Nifty is steadily holding 25,000 level. Geopolitical tensions have been creating pressure on the indices for the medium- to short-term. Continuous selling by foreign portfolio investors is the key reason behind the recent fall. Also, the earnings season so far has not able to entice investors."

Weakness in Adani stocks

Shares of several Adani group companies came under sharp selling pressure during the session. Adani Enterprises Ltd, Adani Ports and Special Economic Zone Ltd, Adani Power Ltd, Adani Energy Solutions Ltd, Adani Total Gas Ltd and Adani Green Energy Ltd plunged as much as 14.63 per cent.

Vinod Nair, Head of Research at Geojit, stated, "Adani Group stocks came under pressure amid reports of potential summons by the US regulator. Looking ahead, market sentiment is likely to remain cautious as investors position for the upcoming Union Budget and the US Fed’s interest rate decision, where expectations are muted."

409 stocks hit 52-week lows

As many as 409 stocks hit their 52-week lows today. BSE500 stocks such as Aditya Birla Fashion and Retail Ltd, Aditya Birla Real Estate Ltd, Adani Ent, Afcons Infrastructure Ltd, Akzo Nobel India Ltd, Adani Total, Bata India Ltd and Blue Jet Healthcare Ltd touched their respective one-year low levels. That said, 75 stocks touched their one-year high levels today.