One of the biggest concerns for markets was the sharp fall in the Indian rupee

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The Indian stock market on January 29, 2026, traded with weak and mixed sentiment as investors waited for the Union Budget and reacted to currency pressure. Both benchmark indices ended lower after a volatile session. The Nifty 50 closed around 25,184 points, while the BSE Sensex finished near 81,763. 

Technology and automobile stocks dragged the market, while some buying was seen in infrastructure and pharmaceutical shares. 

Rupee Hits a Record Low and Affects Market Confidence

One of the biggest concerns for markets was the sharp fall in the Indian rupee. The currency touched a record low of nearly 91.99 against the US dollar on January 29. This fall was caused by strong foreign fund outflows, higher gold imports, and demand for dollars from importers. 

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The weak rupee increased worries about inflation and external stability. Currency pressure also made foreign investors more cautious about Indian assets. Even though authorities tried to control volatility, the fear of further rupee weakness stayed in the market's mind.

Foreign Investors Continue to Show Equity Interest

Foreign institutional investors continued selling Indian equities in large volumes during January. Monthly outflows reached several billion dollars, adding pressure on benchmark indices. Global interest rate trends and risk aversion reduced fresh buying interest. Domestic investors tried to support the market, but foreign selling limited any strong upside movement. Because of this imbalance, stock-specific news and earnings results became more important than overall market direction.

RBI Policy Outlook and Liquidity Actions

Expectations around monetary policy also shaped trading. A poll of economists showed that the Reserve Bank of India is expected to keep its key policy rate steady at 5.25% through most of 2026. This follows the rate cuts done during 2025. 

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To manage liquidity stress and calm the bond market, the RBI announced open market operations worth nearly Rs. 1 lakh crores. These bond purchases were meant to inject cash into the system and support government securities. The central bank also planned dollar-rupee swap operations to reduce pressure on foreign exchange reserves. These steps were seen as short-term support measures while bigger issues like capital flows and trade balance continue to influence markets.

Sector Performance Shows Rotation

Sector-wise movement was uneven. Information technology stocks underperformed as global demand outlook remained uncertain and profit guidance from some firms disappointed investors. Automobile stocks also remained in a weak state because investors worried about increased production expenses and declining revenue growth. 
Industrial and capital goods stocks showed better performance than other market segments as investors expected the government to increase its infrastructure spending. 

Pharmaceutical stocks gained in parts of the market after some mid-sized companies reported better-than-expected quarterly results. Essential goods companies that export their products experienced increased demand because the weaker rupee will help them boost their revenue earnings.

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Budget Expectations Dominate Sentiment

Sentiment research shows that budget expectations dominate all current market trends. Investors paid close attention to policy choices and fiscal information, which they considered important before the Union Budget. Market participants expected taxation rules, capital expenditure plans, and compliance regulations for new asset classes such as cryptocurrency to become public.

The main factors driving intraday market changes included earnings announcements and budget-related news updates. Traders maintained high market volatility because they stayed away from large investments during the time that followed important policy announcements.

Final Thoughts

The current Indian stock market showed how investors combined their expectations about domestic economic growth with their concerns about international economic instability. The market environment became apprehensive because of three factors, which included record-low rupee levels, continuous foreign investment outflows, and RBI liquidity measures. 

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The market outlook continues to be positive through fundamental economic factors, but investors need to wait for Budget announcements, corporate earnings results, and global monetary policy updates.