Indian equity benchmarks opened sharply lower on Friday, snapping a three-day winning streak, as investors turned cautious ahead of the Union Budget and rising global uncertainties. This came even as the recently signed India EU Free Trade Agreement raised expectations of a positive market reaction. Contrary to that optimism, profit booking and risk reduction dominated early trade.

At around 9.30 am, the S&P BSE Sensex was down 516.43 points at 82,049.94, while the NSE Nifty50 slipped 192.75 points to 25,226.15. Markets declined despite the Economic Survey projecting strong growth prospects for the Indian economy, underscoring investor focus on near-term risks rather than long-term fundamentals.

Markets opened lower after three straight sessions of gains, with selling pressure visible across key sectors such as metals and information technology. Broader markets also came under strain as investors trimmed exposure ahead of Budget Day.

Markets Open Lower Despite Positive Domestic Cues

The fall in equities came even as the Economic Survey projected robust growth for the Indian economy in the coming years. The Survey pegged GDP growth at 6.8 to 7.2 per cent in FY27, with headline inflation expected to remain around 3.5 percent, indicating stable macroeconomic conditions.

However, traders chose to remain cautious, focusing more on immediate concerns such as foreign portfolio investor outflows, currency weakness and global geopolitical developments. The mood reflected a typical pre-Budget trend, where investors prefer to reduce leveraged positions and lock in recent gains.

Market participants appeared to be booking profits following the recent rally, particularly in sectors that had seen sharp upside in the past few weeks. The absence of fresh domestic triggers also limited buying interest in early trade.

Global Headwinds And Crude Oil Concerns Weigh On Sentiment

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said markets are currently navigating a mix of supportive and adverse factors.

“As we near the Budget Day there are headwinds and tailwinds for the market. Geopolitical issues continue to plague global trade with continuous threats of tariff weaponisation by Trump. The spike in Brent crude to near $70 is a headwind for Indian macros in general and industries that use oil as inputs, in particular,” he said.

Rising crude oil prices tend to pressure India’s current account balance and raise input costs for several sectors, which can impact corporate margins. Global uncertainty around trade policies and geopolitical tensions has also kept risk appetite in check across emerging markets.

Economic Survey Offers Medium Term Support

Despite near-term caution, Vijayakumar highlighted that the Economic Survey’s growth outlook provides resilience to Indian equities over the medium term.

“GDP growth of 6.8 to 7.2% in FY27 and headline inflation of around 3.5% suggest nearly 10% nominal GDP growth. This can deliver 15 to 17% earnings growth in FY27, which gives resilience to the market,” he said.

He also noted that a slowdown in foreign portfolio investor outflows could indicate a potential shift in strategy, offering some support to markets once near-term uncertainties ease.

FII Selling Continues To Pressure Markets

One of the key reasons behind today’s market fall is continued selling by foreign investors. Foreign portfolio investors have sold Indian equities worth Rs 43,686.59 crore in January so far. This follows record outflows of nearly $19 billion in 2025.

On January 29 alone, foreign institutional investors sold shares worth Rs 394 crore. Domestic institutional investors, however, provided partial support by purchasing equities worth Rs 2,638 crore.

Ajit Mishra, SVP Research at Religare Broking Ltd, said investor sentiment remains cautious ahead of key domestic events.

“Market sentiment stayed cautious as investors awaited key domestic events, including the upcoming Union Budget. Global uncertainty, mixed corporate earnings and continued foreign institutional selling weighed on risk appetite, while weakness in the Indian rupee added to the cautious undertone,” Mishra said.

He advised investors to remain selective and avoid chasing short-term market recoveries.

Falling Rupee Adds To Investor Caution

The Indian rupee remained under pressure, further weighing on market sentiment. The currency opened at 91.9125 against the US dollar, nearly flat compared to its previous close of 91.9550, after touching an all-time low of 91.9850 on Thursday.

The rupee has declined around 2.3 percent so far this month and is heading towards its worst monthly performance since September 2022. A weaker currency raises concerns over imported inflation and higher input costs for companies dependent on overseas raw materials.

At the Economic Survey 2026 press briefing, Chief Economic Adviser Venkatramanan Anantha Nageswaran said the rupee’s depreciation needs to be viewed in a global context.

“Currency depreciation that we are witnessing today is not something unique to India. Countries which have a current account deficit have seen their currencies depreciate,” he said.

Broader Markets And Sectors Under Pressure Ahead Of Budget

Selling pressure was not limited to frontline indices, with broader markets witnessing sharper losses. The Nifty Midcap 100 fell 1.07 percent, while the Nifty Smallcap 100 slipped 1.41 percent shortly after the opening bell. Market volatility also increased, with India VIX rising 3.04 percent.

On the Sensex, ITC Ltd was the top gainer, rising 0.88 percent, followed by Hindustan Unilever Ltd, Asian Paints Ltd and Sun Pharmaceutical Industries Ltd. Adani Ports and Special Economic Zone Ltd also traded marginally higher.

On the losing side, Tata Steel Ltd dropped 3.34 percent, while IT stocks came under pressure. HCL Technologies Ltd, Infosys Ltd, Tata Consultancy Services Ltd and Tech Mahindra Ltd all traded lower. Nifty Metal saw a sharp decline of 4.12 percent, while Nifty IT slipped 1.53 percent. Most other sectoral indices traded in the red, with limited pockets of strength in FMCG and pharma.

Overall, market sentiment remains cautious as investors await clarity from the Union Budget and continue to track global developments, currency movement and foreign investor flows.

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