Indian Markets Drop as Global Tensions and Foreign Investors Pull Out

Sensex and Nifty extend losses amid global uncertainty, weak earnings sentiment, and continued foreign investor outflows.

Written by: Supriya Kadu

Edited by: Rajan Mhatre

Last Updated: January 21, 2026

Summary: Sensex and Nifty slip as global tensions and steady foreign withdrawals weigh on sentiment.

Indian stocks kept sliding on Wednesday. Both the Sensex and Nifty opened lower and just kept heading south, weighed down by a mix of overseas worries and steady selling from foreign investors.

By mid-morning, the Sensex had lost almost half a per cent, and the Nifty wasn’t far behind, down around 0.36%. Mid-cap and small-cap stocks got hit too, with most sectors flashing red.

Investors pointed to a cocktail of problems. International conflicts and shaky geopolitics have made people nervous, and that’s pushing them out of stocks. On top of that, foreign institutional investors have been quietly pulling their money out of Indian markets, adding to the pressure.

It's not only India; markets around the world appear nervous. People are concerned about global trade rules, new tariffs, and unexpected movements by major economies. When things get tense on the world stage, Indian stocks usually feel it fast.

Local news hasn’t given much to cheer about either. Several heavyweight companies reported mixed earnings for the December quarter, and that’s made investors think twice about putting more money to work. Many are just waiting on the sidelines, watching and wondering.

The rupee’s also struggling. It’s dropped against the dollar as nervous global investors head for the exits. A weaker currency makes India a less attractive bet for foreigners, feeding the cycle of outflows.

Nonetheless, not everyone is pessimistic. Some investors see the slump as an opportunity to buy in for the long term, particularly if basic economic data remains strong and things calm down. Despite the ongoing chaos in global politics and trade, markets seem likely to stay unpredictable for the near future.