Why are markets down today?

In this blog, we take a look at how markets fell by over 1% today and identify the key reasons behind this decline.

Today, 20th January 2026, the Nifty 50 index fell by almost 350 points and the Sensex by more than 1000 points. Nifty Realty, Auto, and Energy are among the top losers, plummeting over 2%. Eternal, Bajaj Finance, Sun Pharma, and Adani Enterprises are among the top losers from the Nifty 50. While Reliance, Bajaj Finance, M&M, and ITC were the biggest drags on the Nifty 50. Also, the Midcap and Smallcap Indices plunged over 2%.

But Why?
Here are the key reasons for the market decline:

1. Growing global uncertainty:
Rising trade war risks, after fresh geopolitical tensions between the US and Europe. Donald Trump’s threat of 10% tariffs on eight European countries starting from 1st February 2026 due to their stance on Greenland has created uncertainty. The European Union is considering retaliatory measures.

2. Earnings Season:
Corporate results have been mixed, with several companies reporting muted growth. The impact of one-time factors, including changes related to new labour norms, has also clouded earnings visibility. Q3 earnings have been underwhelming, with no major positive surprises.

3. Relentless FII selling: 
Foreign institutional investors (FIIs) have been selling Indian stocks relentlessly. In January so far, they have sold Indian stocks worth over ₹29,000 crore in the cash segment amid persistent uncertainty over an India-US trade deal, the rupee's weakness against the dollar, and an earnings-valuation mismatch.

4. Domestic Factors:
The rupee has also weakened against the dollar, and there is caution in the market ahead of the upcoming Union Budget on February 1, 2026.

Here are the key levels to watch for the Nifty 50 in the coming days:
The 200 DMA level, which is near 25,160, is the key and nearest support for Nifty 50 in the coming days.The next support is 25,000, which is a psychological support, and if Nifty 50 breaches it decisively, then it can fall further till its previous swing low of 24,600.

Furthermore, should you still invest in safe havens like Gold and Silver?
Amid the heightened geopolitical and economic risks, investors are flocking to safe-haven assets, with gold and silver prices surging to record highs. Ideally lumpsum investments in gold and silver should be avoided despite market volatility, but one may continue with the monthly SIPs.