Markets Slip After Opening as Dalal Street Shrugs Off India-EU Trade Deal

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Markets Slip After Opening as Dalal Street Shrugs Off India-EU Trade Deal

Benchmark indices fell nearly 0.5% shortly after opening despite positive sentiment around the India-EU free trade agreement. Continued foreign investor selling, a weakening rupee and global trade concerns weighed on market sentiment.

Published by Somesh | January 27, 2026

Indian equity benchmarks slipped nearly half a percent in early trade on Tuesday, as Dalal Street brushed aside positive news related to the India–EU free trade agreement and focused instead on persistent foreign fund outflows and a weakening rupee.

At around 9:30 am, the S&P BSE Sensex was down 393.37 points at 81,144.33, while the NSE Nifty50 declined 96.65 points to 24,952.00. The early decline reflected continued caution among investors despite optimism around global trade developments.

Commenting on the market’s underperformance, Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the Indian equity market and the rupee have been weakening in tandem so far in 2026. He noted that while many emerging market currencies have strengthened as the US dollar softened, the rupee has depreciated mainly due to sustained foreign institutional investor (FII) outflows.

According to Vijayakumar, this combination of currency depreciation and continued FII selling has resulted in a 4.2% decline in the Nifty so far this year. He added that fundamental support from stronger third-quarter earnings has not materialised, though there are early signs that fourth-quarter earnings could show improvement.

From a sentiment perspective, the announcement of the India–EU FTA is positive, but its impact on markets is expected to be limited in the near term. Vijayakumar pointed out that the agreement is likely to become operational only from 2027, making it an unlikely trigger for an immediate market rally.

Global trade tensions also remained in focus. The Trump administration has continued to raise tariffs, including an increase in duties on South Korean imports from 15% to 25%. This has added to concerns that a much-needed US–India trade agreement could face delays, despite optimistic signals from Washington.

Market experts said current conditions favour a stock-picker’s approach, with individual stocks reacting sharply to Q3 earnings and management commentary. Investors may find opportunities in companies delivering better-than-expected results and demonstrating sustained growth visibility.