India’s benchmark share indices logged their steepest single-day fall in over four months on Thursday, dragged down by heavyweight Reliance Industries and broader selling linked to renewed uncertainty over U.S. tariff policy and global risk sentiment. The sell-off reflected investors’ growing concern about protectionist measures and their potential impact on trade and corporate profitability, particularly for export-linked sectors. Broader market indices retreated as foreign portfolio outflows accelerated and domestic institutional investors took a cautious stance.

Investors pointed to macro headwinds, including slowing export demand and geopolitical risk premiums, as key contributors to negative sentiment. Liquidity conditions and thin holiday-season trading may have also amplified the drop in stock prices.

Sector rotation toward defensive stocks was partly visible as buyers sought refuge in utilities and healthcare amid the broader sell-off. However, these gains were insufficient to offset significant declines in benchmark heavyweights.

Currency markets saw the rupee modestly weaker against the dollar as capital flows responded to risk-off positioning, affecting import costs and corporate earnings projections.

Market strategists said India’s stock volatility underscores how global policy uncertainties can quickly permeate emerging markets, influencing investor behaviour and portfolio allocations in early 2026.

Source: Reuters