Rs 6 lakh crore wiped out! Sensex crashes 1,000 points, Nifty falls below 25,000. 5 factors behind the current market crisis

Indian shares fell deeper into the red on Wednesday, extending a painful sell-off into a third straight session as global shockwaves and patchy gains sapped risk appetite. The BSE Sensex fell over 1,000 points intraday, while the Nifty 50 fell below the closely-watched 25,000-point mark for the first time since October 2025.The Sensex fell as much as 1,056 points to an intraday low of 81,124, while the Nifty fell 1.2% to hit an intraday low of 24,920. At the opening bell, the Sensex fell 102 points, or 0.22%, to 82,078.16, and the Nifty fell 17 points, or 0.07%, to 25,215.55, falling below 25,250 as early gains faded.

The sell-off wiped out around Rs 6 lakh crore of investor wealth, reducing the market capitalization of all BSE-listed companies to Rs 449.76 lakh crore.The decline reflects a market grappling with multiple headwinds at once, continued foreign fund outflows, uneven domestic profits and rising global uncertainty, after Tuesday’s sharp sell-off dragged benchmarks to their weakest levels in more than three months.

Here are the main factors behind today’s market decline:

1. Trump’s threats to Greenland

Asian markets extended their losses for a third session amid escalating tensions over US President Donald Trump’s threats to acquire Greenland and revive a trade war with the European Union. The rhetoric revived fears of overseas sales of U.S. assets, the so-called “Sell America” ​​trade that first emerged after last April’s “Liberation Day” tariff announcements, after Wall Street plunged more than 2% overnight and the U.S. dollar recorded its biggest drop in more than a month.

That global rout pushed investors to safe havens, with gold and silver hitting record highs. Trump doubled down on his stance, saying there was “no turning back” on his goal of controlling Greenland and refusing to rule out the use of force. His renewed tariff threats against Europe have raised fears of a new global trade war. The European Union will hold an emergency summit in Brussels on Thursday as investors await Trump’s speech at the World Economic Forum later Wednesday in Davos. In early trading, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3%, while Japan’s Nikkei fell 1.2%, extending its losing streak to five sessions. US futures managed to regain some ground, but only after the S&P 500 fell 2.06% and the Nasdaq Composite plunged 2.4% overnight.

2. Weak domestic revenues

A choppy earnings season offered little relief. The misses of heavyweight companies like Reliance Industries Ltd. and ICICI Bank weighed on sentiment, reinforcing concerns that high valuations may be ahead of fundamentals.

The IT index fell 1%, leading to sectoral losses. Persistent Systems fell 3.5% despite reporting higher quarterly profit, as several brokers flagged limited upside potential and cited rich valuations. The combination of earnings disappointment and cautious outlook has made investors increasingly selective, reinforcing the broader market pullback.

3. Rupee falls to record low

The Indian rupee fell to an all-time low on Wednesday, adding another layer of discomfort for stock investors already reeling from global risk aversion. The currency weakened past the previous low of 91.0750 per US dollar in mid-December and was last trading around 91.2950, ​​pressured by fears arising from the Greenland conflict, continued capital outflows and the absence of a US-India trade deal.

The rupee has fallen about 1.5% so far this month, continuing a decline of almost 5% through 2025, a move that has raised concerns about imported inflation and sentiment among foreign investors. The Reserve Bank of India has stuck to its recent playbook, intervening intermittently to smooth volatility rather than defending a specific level in the currency market, allowing the currency to adjust to broader global and domestic pressures.

4. Foreign investors continue to sell

Relentless selling by foreign institutional investors continued to undermine market confidence, with FIIs extending their net selling streak to an eleventh straight session. On Tuesday, January 20, foreign investors sold shares worth nearly Rs 2,938 crore, reflecting their caution amid rising global trade tensions and geopolitical uncertainty.

Although domestic institutional investors provided some counterbalance, this was not enough to halt the decline in benchmark indices. DIIs were net buyers of shares worth around Rs 3,666 crore on the same day, providing limited support to the market as foreign outflows remained the dominant driving force behind the price action.

5. Technical charts point to further weakness

Technical signals added to the bearish mood on Wednesday as major benchmarks breached crucial support levels. “Benchmark indices fell sharply. Nifty closed 353 points lower, while Sensex fell 1,066 points. Sector-wise, all major indices were in the red with the Realty index falling the most, down over 5%,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities.

After a weak start, the market broke through the 25,500/83,000 support level, leading to further selling, Chouhan said. “A long bearish candle on the daily charts and a lower-top formation on the intraday charts indicate further weakness from current levels. Although the intraday market structure is oversold, a sharp pullback rally from lower levels cannot be ruled out.”

Chouhan suggested that as long as the market trades below 25,500/82,900, weak sentiment is likely to persist, with a potential downside to 25,100–25,000/81,800–81,500.

Anand James, Chief Market Strategist at Geojit Investments, said: “The favored view expects an extension of the downtrend, targeting 24,715-24,580. Standard deviation studies allow for periodic upside attempts, targeting 25,300/380, with the 200-day SMA nearby. However, these are less likely to hold unless the market breaks above 25,470.”

Traders were advised to sell between 25,350 and 25,400 with a tight stop loss at 25,500, and consider buying only between 25,050 and 25,000 if levels weaken further, with a stop loss at 24,900.