Sensex, Nifty trading setup: Will Dalal Street indices crash again today?

By Admin

21 Jan, 2026

Introduction
Indian equity markets are entering Wednesday’s session on a cautious note after a sharp selloff dragged benchmark indices to multi-month lows. The big question on Dalal Street now is whether Tuesday’s fall was a one-day shock reaction or the start of a deeper corrective phase.

Market recap: steep fall shakes confidence
On Tuesday, the Nifty declined around 1.4% while the Sensex slipped about 1.3%, marking their sharpest single-day fall in more than eight months. Both indices closed at their lowest levels in over three months, reflecting intense selling pressure.

From their record highs, the Nifty is now down about 4.3% and the Sensex has fallen nearly 4.6%. The steady decline over recent weeks indicates that investors have been gradually turning cautious even before the latest selloff.

Opening cues: mild recovery but fragile sentiment
Indian stock markets are expected to open marginally higher on Wednesday after the heavy fall in the previous session. Gift Nifty futures were trading around 25,265.5 points at about 8:01 am IST, suggesting that the Nifty 50 could start slightly above Tuesday’s close of 25,232.50.

While this hints at a mild bounce at the open, traders remain wary. Early indicators suggest that the recovery, if any, may be tentative as global uncertainty and foreign selling continue to dominate sentiment.

Global trade and geopolitics add pressure
Global markets remain under strain due to rising trade and geopolitical tensions. Fresh concerns emerged after US President Donald Trump spoke about acquiring Greenland and hinted at reviving a trade war with the European Union. These comments have increased uncertainty and pushed investors towards safer assets.

Adding to the discomfort is the lack of progress on a US-India trade deal, despite multiple rounds of discussions. Together, these global factors are weighing heavily on market confidence.

Earnings season disappointments deepen worries
The ongoing results season in India has been mixed, with several large companies reporting earnings below market expectations. Disappointments from heavyweight stocks such as Reliance Industries and ICICI Bank have added to the selling pressure, especially at a time when market valuations were already considered stretched.

These earnings misses have made investors more selective and risk-averse, contributing to the recent decline in benchmark indices.

Foreign investors continue to sell
Foreign portfolio investors remain firmly on the sell side. In January so far, FPIs have sold Indian shares worth $3.23 billion, contributing to a 3.5% fall in benchmark indices this month.

In January 2026, foreign institutional investors sold shares worth Rs 32,253.55 crore, while domestic institutional investors bought shares worth Rs 41,976.70 crore, providing some support to the market. However, the pressure from overseas selling remains strong. On Tuesday alone, FIIs sold shares worth Rs 2,938.33 crore.

Wall Street selloff reinforces risk-off mood
Global risk sentiment worsened further after a sharp selloff on Wall Street. All three major US indices recorded their biggest one-day fall in three months amid fears that fresh tariff threats against Europe could trigger renewed market volatility.

The Dow Jones Industrial Average dropped 870.74 points or 1.76% to 48,488.59. The S&P 500 fell 143.15 points or 2.06% to 6,796.86, while the Nasdaq Composite slid 561.07 points or 2.39% to 22,954.32.

The risk-off trade pushed gold to fresh record highs, US Treasury yields rose amid selling pressure, and Bitcoin fell more than 3%. Asian markets also remained weak, with the broader regional index slipping around 0.2%.

Technical outlook: key support under watch
On the technical front, the Nifty has slipped below its 20-day, 50-day and 100-day moving averages. It is currently hovering just above its 200-day moving average, a level often considered crucial for the medium- to long-term trend.

Analysts believe the market looks oversold in the short term, which could allow a brief relief rally. However, they warn that any bounce may face strong resistance unless key levels are decisively reclaimed.

Expert view: volatility likely to persist
According to Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, market volatility is expected to continue in the near term due to unresolved global issues.

He noted that uncertainty around the US-Europe standoff on Greenland-related tariffs is likely to keep markets on edge. He also pointed out that a potential US Supreme Court ruling on Trump-era tariffs could significantly alter the global market scenario, but there is no certainty on the timing or outcome.

Conclusion: crash or consolidation?
While a repeat of Tuesday’s sharp fall is not guaranteed, the overall market environment suggests that volatility is far from over. Global cues, foreign fund flows, earnings updates and developments on trade issues will remain key drivers.

For now, caution is likely to guide Dalal Street, with investors watching closely to see whether support levels hold or further downside pressure emerges in the coming sessions.