Stock market crash today: Nifty50 closes at 25,048; BSE Sensex drops 769 points to settle at 81,537 - top reasons

Stock market crash today: Heavy selling pressure dragged benchmark indices down, with Nifty50 settling 241.25 points lower at 25,048.65 and the Sensex closing 769.67 points lower at 81,537.70.

Friday’s decline followed a rebound in the previous session, when benchmark indices had ended a three-day losing streak. Early trade sentiment had drawn limited support from gains in Asian markets and easing geopolitical concerns related to Greenland, but those factors failed to sustain the rally.

The selloff led to the combined market capitalisation of BSE-listed firms shrinking by Rs 5.7 lakh crore to Rs 452.69 lakh crore, according to an ET report.

Why is the stock market crashing today?

Persistent foreign institutional investor selling remained the key pressure point. FIIs sold equities worth Rs 2,550 crore on Thursday, extending their selling streak to 13 consecutive sessions in January. So far this month, they have been net buyers on only one occasion, January 2.

The ongoing contest between overseas investors trimming exposure and domestic institutions providing support has continued into the new year. “The pattern of sustained FII selling and DII buying which dominated the market trend in 2025 has been continuing in 2026, too, so far,” said Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, adding that whether this trend will shift with FIIs returning as buyers remains a key question for investors.

Vijayakumar said the Union Budget scheduled for February 1 could provide some direction if it includes proposals supportive of the markets, but stressed that foreign investor behaviour will hinge more on the trajectory of corporate earnings in India.

“Partly the Budget to be presented on February 1st will offer some insights, if there are some market-friendly proposals. More importantly, the FII stance towards India will be determined by the trend in India’s corporate earnings. Higher earnings growth alone can ensure sustained buying by FIIs since they have the option to invest in other markets where valuations are cheaper and earnings are better. Since earnings growth is sometime away and the FII selling strategy is expected to continue, preempting any healthy rally, the market is heavily net short. FIIs are adding to the short positions on every rally triggered by some positive news. The broader market, where FII presence is limited, is like to witness action in response to Q3 results,” he said.

Meanwhile, pressure on domestic financial assets deepened as the rupee slipped to a fresh record low against the US dollar, adding to caution in equities. The currency fell beyond its earlier low of 91.7425 to touch 91.77, weakening by around 0.2% on the day. Persistent demand for dollars from importers and corporates outweighed early stability in the currency market, intensifying strain on the rupee. The latest slide underscored concerns over capital outflows and strong dollar demand, further weighing on investor confidence in local stocks.

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