WEEKLY MARKET RESEARCH REPORT 19-23 Jan | Scrolls
- Editor
- 5 days ago
- 2 min read
by Karnivesh | 2026
The week of January 19–23, 2026 marked a decisive turning point for Indian equity markets. What began the year as a phase of cautious consolidation abruptly shifted into a broader correction, fundamentally altering market sentiment, earnings expectations, and risk perception.
Until mid-January, investors believed India would remain relatively insulated from global trade disruptions, supported by strong domestic growth, resilient banks, and relentless domestic institutional buying. That belief was decisively challenged this week.
The primary shock came from the escalation of US tariffs to 50% on Indian exports, one of the most severe external threats faced by India’s export ecosystem since 2018. The announcement immediately repriced risk across export-heavy sectors. IT services, pharmaceuticals, and auto components pillars of India’s global competitiveness—were suddenly viewed as structurally vulnerable rather than temporarily pressured. Markets rapidly priced in lower demand, margin compression, and multi-year earnings downgrades.
This tariff shock triggered a cascade of secondary pressures. The rupee slid to an all-time low of ₹91.77/USD, amplifying investor anxiety around capital outflows, imported inflation, and the limits of RBI intervention. At the same time, earnings season delivered unwelcome confirmation: profits were not merely slowing—they were weakening structurally. Guidance downgrades, particularly from technology companies, forced markets to slash FY27 earnings growth expectations from 8–10% to just 2–3% within a single week.
Crucially, institutional dynamics also shifted. While domestic institutions continued buying, their capacity to absorb relentless foreign selling showed visible fatigue. Friday’s collapse in DII buying signaled a critical inflection point—markets could no longer rely on domestic flows as an unlimited backstop. With ₹40,700+ crore in FPI outflows already recorded in January, investors began to confront the possibility of a deeper repricing cycle.
Market behavior reflected this regime change. Defensive sectors failed to protect capital, midcaps and smallcaps saw sharp liquidation, volatility rose meaningfully, and the Nifty closed below its 200-day moving average for the first time in months. What had looked like a healthy correction now resembled a capitulation-style breakdown, driven by earnings downgrades, currency stress, and macro uncertainty rather than valuation excess alone.
By week’s end, the market narrative had clearly transformed:
Tariffs are no longer a hypothetical risk—they are a structural reality
Earnings visibility has weakened materially
Domestic liquidity support is finite
Valuations are fair, not cheap
Only select domestic-focused sectors retain relative safety
Looking ahead, attention has shifted decisively to the Union Budget on February 1, now seen as the most important near-term catalyst. Markets are entering a holding pattern less willing to buy dips, more sensitive to negative surprises, and acutely focused on policy credibility. Whether this correction stabilizes or deepens will depend on the government’s response to export stress, the trajectory of earnings revisions, and the ability of domestic flows to withstand continued foreign selling.
In essence, this week did not just move prices it reset expectations. The market is no longer trading on optimism, but on proof.
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