Sensex, Nifty Crashed To 7-Month Low; Will Indian Stock Market Rise Or Fall On Wednesday, January 22?

Stock Market Crash: Indian benchmarks Sensex and Nifty breached their seven-month low levels on Tuesday, January 21, as the magic of Trump's inauguration at the White House failed to sway sentiments in domestic equities. Heightened volatility, uncertainty towards Trump's tariffs, Q3 results, consistent FII outflow and weakening Indian rupee dragged the domestic equities.

Explaining the latest decline, Vinod Nair, Head of Research, Geojit Financial Services said, domestic markets experienced a significant decline today, with heightened volatility, followed by Trump's announcement of trade tariffs on neighbouring countries on his inauguration day, adding uncertainty to global markets. The weak recovery in the ongoing Q3 earnings, coupled with a depreciating INR, is likely to prompt further outflows from FIIs. Mid and small-cap stocks underperformed compared to the main indices.

Nair added, "The realty sector was hit the hardest due to weak pre-result updates, while banks suffered due to rising asset quality stress. Additionally, the expectation of an interest rate hike by BoJ is dampening market sentiment."

What is a stock market outlook on January 22?

As per Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd, "Donald Trump's remarks targeting BRICS nations, reiterating his intention to impose 100% tariffs on countries reducing their reliance on the US dollar for global trade, induced negative sentiments in the Indian market. Global markets are also intimidated by the expectation of an interest rate hike by the Bank of Japan (BOJ) in its upcoming decision on Friday which could impact borrowing costs globally. We expect markets to remain under pressure in the near term amid mixed quarterly earnings and heavy FPI selling. Investors will closely track the Q3 earnings of heavy-weights like HDFC Bank, HUL, BPCL to be announced tomorrow. Midcap IT stocks will be in focus as Coforge and Persistent Systems also announce their results tomorrow."

Further, Shrikant Chouhan, Head of Equity Research, at Kotak Securities said, "After a gap-up open, the market consistently faced selling pressure at higher levels. This led to the formation of a long bearish candle on the daily charts, and the index closed below the 23,100/76000-support zone, which is largely negative. We are of the view that, as long as the market trades below 23, 100/76000, the weak sentiment is likely to continue."

Chouhan added, "On the downside, the market could slip as low as 22,900/75500. Further weakness is likely to continue, which could drag the market till 22850/75300. However, above 23100/76000, the market could bounce back, moving towards 23,250-23,300/76400-76500. The current market texture is volatile, and thus level-based trading would be the ideal strategy for day traders."

To investors, Satish Chandra Aluri, Lemonn Markets Desk said, Markets are experiencing significant volatility as they digest a deluge of earnings announcements while also unsettled by the uncertainty around Trump administration plans regarding trade tariffs and upcoming budget. For now, investors continued to remain cautious as they adjust their portfolios to reflect the slowing growth and weak earnings while foreign selling pressure continues.

On Nifty, Aluri said, technically, Nifty 50 extended its fall in the downward channel with 23000 acting as crucial support with next support around 22800 levels. Bank Nifty reversed previous session gains to close below the 49000 level with 48500 acting as next immediate support.