Indian equity markets faced a downturn on Tuesday, December 29, 2025, as benchmark indices trimmed earlier gains. The Sensex fell nearly 300 points from its day's high, while the Nifty 50 index dropped below the 25,900 mark. This market correction left investors cautious, driven by a combination of global and domestic pressures. The Sensex closed at 84,515.46, down 180.08 points, after hitting an intraday high of 84,802.64. The Nifty 50 settled at 25,884.55, a decline of 57.55 points, after reaching a high of 25,975.85 earlier in the trading session.[tradingview]
Foreign Investors Lead Selling Pressure
A significant factor behind the market's decline was the continuous selling by Foreign Institutional Investors (FIIs). These overseas investors have consistently pulled funds out of Indian equities, contributing to sustained selling pressure on domestic markets.On Monday, December 28, 2025, FIIs sold equities worth 2,759.89 crore rupees, marking their fifth consecutive session of net outflows.This persistent trend by foreign funds, often influenced by global risk-off sentiment and a strengthening US dollar, has historically overwhelmed buying support from Domestic Institutional Investors (DIIs).Analysts note that sustained FII buying becomes challenging without strong corporate earnings growth to attract them back into the market.[tradingview+5]
Weak Global Cues Impact Sentiment
Global market trends also played a crucial role in dampening investor sentiment in India. Asian markets traded lower, with South Korea's Kospi and Japan's Nikkei 225 index both quoting in the red.US markets also ended lower on the preceding Monday.Weak global cues often weigh on Indian equities by influencing investor risk appetite and affecting fund flows.For instance, fears of a global trade war, sparked by events such as US President Donald Trump's announcement of tariffs on European allies in January 2026, have reignited risk-off moods in equities worldwide.Such geopolitical uncertainties and concerns over broad-based tech sell-offs in international markets can lead to profit booking and cautious trading in India.[tradingview+4]
Rupee Depreciation and Earnings Concerns
The Indian rupee's performance against the US dollar also added to market woes. The rupee hit a record low near 90.13 per US dollar, which was a major factor dragging the market lower.This depreciation was attributed to persistent equity outflows and uncertainty surrounding the India-US trade deal.Currency depreciation can make imports more expensive and raise inflation concerns, impacting overall market sentiment.Furthermore, muted corporate earnings contributed to the gloom. The market's weakness was exacerbated by a subdued earnings season, particularly in heavyweight sectors like Information Technology (IT) and Banking.Major IT firms reported disappointing quarterly numbers, citing a slowdown in global tech spending and delayed client decisions.Weak results from banking giants also pulled the banking index lower.This slowdown in key sectors weighed heavily on benchmark indices, further unsettling investors.[niftytrader+5]
The market's performance reflects a combination of external and internal pressures. While some experts suggest the current downturn could be a phase of profit-booking, investors remain watchful. The Nifty's inability to sustain above key resistance levels has triggered a downward bias, according to market strategists.A sustained recovery will depend on improvements in these underlying factors, including a reversal in FII selling trends, more stable global markets, and stronger domestic economic indicators, especially corporate earnings and currency stability. Investors are advised to monitor the situation closely, focusing on long-term fundamentals amidst expected near-term volatility.[tradingview+1]
