Dalal Street slipped back into deep losses on Friday after a brief recovery in the previous session, with Indian equity markets witnessing heavy selling across sectors. Persistent foreign institutional investor (FII) outflows, pressure on key stocks and a sharply weaker rupee dragged market sentiment lower through the day.

At the close, the S&P BSE Sensex fell 769.67 points to end at 81,537.70, while the NSE Nifty50 dropped 241.25 points to settle at 25,048.65. Despite a rebound on Thursday, market mood remained fragile amid mixed global cues, and domestic indices failed to hold early gains as selling intensified in the latter half of the session.

Foreign investors continued to pare exposure to Indian equities, emerging as the biggest drag on markets. In January 2026 alone, FIIs have sold shares worth Rs 36,591.01 crore. While domestic institutional investors (DIIs) attempted to support the market by buying equities worth Rs 50,720.15 crore during the same period, their efforts were insufficient to fully offset foreign outflows.

Market experts highlighted growing technical weakness. Kranthi Bathini, Director – Equity Strategy at WealthMills Securities, said the Nifty has failed to sustain above the 25,500 level and has slipped close to 25,050. He noted that the 25,000 mark remains a crucial support zone for the index in the near term.

Vinod Nair, Head of Research at Geojit Investments, said markets declined sharply despite supportive global cues and positive domestic PMI data. According to him, rising crude oil prices, the rupee’s sharp depreciation to record lows, continued FII selling and earnings coming in slightly below expectations amid premium valuations weighed heavily on sentiment.

Nair added that realty and PSU bank stocks underperformed due to profit booking and execution-related concerns, while Adani Group stocks remained under pressure amid reports of potential US regulatory scrutiny. He expects market sentiment to remain cautious as investors await key triggers such as the Union Budget and the US Federal Reserve’s interest rate decision.

Adding to equity pressure, the Indian rupee weakened further to hit a fresh all-time low of 91.77 against the US dollar. A falling currency raised concerns over higher import costs and inflation, further dampening investor confidence.

Market participants are advised to remain cautious and avoid panic-driven decisions. With the Nifty hovering near the critical 25,000 support level, the market’s direction in the coming week will depend on whether this level holds and if foreign investor selling shows signs of easing. Short-term volatility is expected to remain elevated amid global uncertainty and currency weakness, while long-term investors are advised to focus on fundamentally strong companies.