Key gauges end sharply lower amid broad-based selling

Extending previous day's decline, Indian equity benchmarks ended sharply lower on Tuesday due to heavy selling pressure in market heavyweights Eternal, Bajaj Finance and Sun Pharma amid escalating geopolitical tensions. Besides, tepid corporate earnings and persistent foreign fund outflows dented investors' sentiment.  

Some of the important factors in trade:

IMF revises India’s GDP growth upward to 7.3% for FY26: The International Monetary Fund (IMF) has increased India's Gross domestic product (GDP) growth forecast for FY26 by 0.7 percentage point to 7.3 percent from its October projection. 

India to become 'upper-middle income' country in next 4 years: SBI Research report has said India is set to touch $4,000 per capita income level, transitioning to 'upper-middle income' country, in next four years to 2030. 

India and the European Union to meet next week: India and the European Union are set to announce the conclusion of a free trade agreement, firming up of a defence partnership pact and a framework for mobility of Indian professionals at the summit talks next week. 

Rupee depreciates against the US dollar: Indian rupee depreciated against the US dollar, as strong dollar demand from metal importers and persistent foreign fund outflows dented investor sentiment.

Global front: European markets were trading lower as U.S. President Donald Trump intensified his rhetoric on Greenland, insisting the U.S. needs the Arctic Island for national security reasons. Asian markets ended mostly lower as U.S. President Donald Trump's tariff threats regarding Greenland reignited concerns about a trade war with the EU and NATO allies. 

Finally, the BSE Sensex fell 1065.71 points or 1.28% to 82,180.47 and the CNX Nifty was down by 353.00 points or 1.38% to 25,232.50.   

The BSE Sensex touched high and low of 83,254.28 and 82,010.58 respectively. There was 1 stock advancing against 29 stocks declining on the index.        

The broader indices ended in red; the BSE Mid cap index fell 2.52%, while Small cap index was down by 2.74%.

The top losing sectoral indices on the BSE were Realty down by 5.21%, Capital Goods down by 2.76%, Consumer Discretionary down by 2.73%, Consumer Durables down by 2.71% and Industrials down by 2.56%, while there were no gaining sectoral indices on the BSE. 

The lone gainer on the Sensex was HDFC Bank up by 0.38%. On the flip side, Eternal down by 4.02%, Bajaj Finance down by 3.88%, Sun Pharma down by 3.68%, Interglobe Aviation down by 3.04% and Trent down by 2.89% were the top losers.

Meanwhile, the International Monetary Fund (IMF) has increased India's Gross domestic product (GDP) growth forecast for the fiscal year 2025-26 (FY26) by 0.7 percentage point to 7.3 percent from its October projection. This upward revision is attributed to the better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter. 

In its World Economic Outlook (WEO), IMF has also revised India's growth projection to 6.4 per cent for the next fiscal year (FY27), from its earlier estimate of 6.2 per cent. It also expects growth to settle around 6.4 percent in FY28 as cyclical and temporary factors wane. 

Talking on inflation, IMF said it is expected to go back to near target levels after a marked decline in 2025 driven by subdued food prices. The Reserve Bank has a target to maintain consumer price index (CPI) based headline inflation at 4 per cent, with a margin of 2 per cent on the either side.

CNX Nifty touched high and low of 25,585.00 and 25,171.35 respectively. There were 3 stocks advancing against 47 stocks declining on the index.      

The few gainers on Nifty were Dr. Reddy's Laboratories up by 0.46%, HDFC Bank up by 0.28% and Tata Consumer Product up by 0.28%. On the flip side, Adani Enterprises down by 3.96%, Bajaj Finance down by 3.89%, JIO Financial Services down by 3.72%, Eternal down by 3.59% and Coal India down by 3.29% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 124.57 points or 1.22% to 10,070.78, France’s CAC fell 99.22 points or 1.22% to 8,012.80 and Germany’s DAX lost 307.06 points or 1.23% to 24,652.00.

Asian markets ended mostly lower on Tuesday due to lack of direct cues from Wall Street overnight because the US markets were closed on Monday in observance of the Martin Luther King Jr. Day holiday. Japan’s Nikkei fell sharply on growing fiscal concerns and US President Donald Trump's renewed tariff threats against European allies over Greenland. South Korea's Kospi dropped as investors took profits in major chipmakers and automakers stocks. Chinese shares declined marginally after the People’s Bank of China (PBOC), Chinese central bank, announced to leave its Loan Prime Rates unchanged on Tuesday. The one-year and five-year LPRs were at 3.00% and 3.50%, respectively. Market sentiments weakened further as Chinese regulators cracked down on speculation and trading malpractice.