- Indian stocks fell on Jan. 13, 2026 (Nifty -0.22%, Sensex -0.30%) as renewed U.S. tariff threats tied to Iran trade sparked broad risk-off selling.
- Foreign investors have continued heavy selling, with about $1.72 billion of equity outflows in January after a record $19 billion withdrawal in 2025.
- Reliance and IT shares led declines, while a weaker rupee and higher bond yields added to pressure amid delayed global bond-index inclusion.
- Markets are now focused on whether U.S.–India trade talks can reduce tariff risk and stabilize sentiment for export- and trade-exposed sectors.
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Indian markets are under increasing pressure from external policy risks—chief among them renewed tariff threats from the U.S., especially pertaining to trade with Iran. On January 13, 2026, market optimism—fostered by potential U.S.–India trade discussions—proved fragile as these threats resurfaced. The Nifty 50 and Sensex fell despite a modest pre-market lift tied to hopes of progress in those talks.
Foreign portfolio investors are driving much of the downward momentum. There’s been approximately $1.72 billion in equity outflows during January so far, after 2025 saw a record $19 billion withdrawn overall. Small-caps and mid-caps have been disproportionately affected, while large caps like Reliance Industries and technology stocks, including HCLTech and TCS, also saw substantive losses.
Currency and bond market dynamics add to fragility. The rupee is weakening—hovering near 90.25 per dollar—with bond yields rising (10-year yields nearing 6.63%), partly due to delays in India’s inclusion in major global bond indices. These factors both increase cost pressures and reduce incentive for foreign investment.
Strategically, sectors heavily exposed to U.S. demand as well as those dependent on trade and external supply chains—namely IT, pharmaceuticals, and energy—face acute risk. Meanwhile, domestic institutions are acting as partial cushions, but without restoration of investor confidence (foreign or otherwise), broader market reversal may be limited. Policy resolution—particularly a U.S.–India trade agreement with credible protections and clarity—is increasingly urgent.
Open questions remaining: Will U.S. tariff policies solidify in a way that imposes lasting damage? Can earnings growth outstrip mounting cost and policy headwinds, especially in IT and exports? And finally, how will RBI and fiscal authorities respond if currency volatility and capital flight accelerate?
Supporting Notes
- The January 13 market drop saw Nifty 50 fall ~0.22% to 25,732.3; Sensex down ~0.30% to 83,627.69.
- Foreign investors offloaded $1.72 billion in equities in January so far, following a record $19 billion outflow throughout 2025.
- Reliance Industries dropped ~2.1% after stating it won’t receive Russian crude; IT index fell ~0.4%, with HCLTech down ~2% and TCS ~0.1%.
- Tariff threat: U.S. President Donald Trump warned of an extra 25% tariff on countries trading with Iran; India’s bilateral trade with Iran was $1.34 billion over first 10 months of 2025.
- Rupee weakened to ~₹90.25 per U.S. dollar; India’s 10-year government bond yield rose to ~6.63%.
- Ten out of 16 major sectors fell; small-caps rose 0.6% while mid-caps fell ~0.2% in the January 13 session.