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Indian Stock Market Faces Significant Decline in First Week of 2026

The Indian stock market has experienced a significant downturn in the first week of 2026, with both the BSE Sensex and NSE Nifty dropping over 2%. Key factors contributing to this decline include continuous selling by foreign institutional investors, uncertainties surrounding U.S. tariffs, and rising geopolitical tensions. As the market looks ahead, analysts suggest monitoring specific stocks and staying alert to upcoming Q3 results, which could influence recovery. This article provides insights into the current market situation and what investors should keep an eye on in the coming days.
By Narendra Chaudhary Jan 11, 2026, 11:45 IST

Market Overview

On January 11, 2026, Indian stock markets concluded the first trading week of the year with a notable decline. Both the BSE Sensex and NSE Nifty experienced a drop of over 2%, marking the largest weekly decrease in the past four months. The markets saw a loss of approximately 1,500-1,600 points for the Sensex and over 470 points for the Nifty, closing below 25,900 for Nifty and around 84,200 for Sensex.

Key Reasons for the Decline

  • Continuous Selling by Foreign Institutional Investors (FIIs): So far in January, there has been a sell-off exceeding ₹11,700 crores, continuing the trend from 2025, which saw a record sell-off of ₹1.66 lakh crores.
  • Uncertainty Over U.S. Tariffs: The Trump administration has threatened tariffs of up to 50% on countries purchasing Russian oil, including India, with a potential 500% tariff specifically on Russian crude imports.
  • Geopolitical Tensions: Increased global risks due to U.S. military actions in Venezuela (arrest of Maduro), and ongoing tensions between Russia-Ukraine and China-Japan.
  • Impact of Global Market Slowdown: Sectors such as IT, oil, metals, and automotive have been significantly affected.


Stocks to Monitor (January 11, 2026 and Beyond)

While a market recovery is anticipated, caution is advised. Here are some key stocks to watch based on expert insights and recent updates:


  1. Reliance Industries (RIL): Experienced a decline of 7-9% this week due to halted Russian crude deliveries, but remains strong in the long term with growth in retail, digital, and energy sectors.
  2. Tata Steel: Achieved record production in Q3, but faces challenges in the metal sector due to tariff impacts.
  3. ITC, Kotak Mahindra Bank: Both saw a drop of over 2% this week, facing pressure in banking and FMCG sectors.
  4. Hindustan Unilever (HUL), Tata Power: Recommended by experts as top picks due to strength in FMCG and renewable energy sectors.
  5. ABB, Fortis, Petronet: Recent recommendations highlight positive outlooks in infrastructure, healthcare, and gas sectors.
  6. Adani Group Stocks (including Adani Ports, Adani Enterprises): Most affected by tariffs and FII selling, alongside ICICI Bank as top losers.


What Lies Ahead?

  • Q3 FY26 Results are set to begin with TCS and Infosys leading the way; positive results could provide relief.
  • Keep an eye on U.S. jobs data and tariff updates; any positive signals could indicate a potential recovery.
  • Advice for D-Street: Engage in selective buying; long-term investors may find opportunities during dips, but short-term volatility is expected.


Stay Informed!

Market fluctuations are ongoing, influenced by FII trends, global sentiment, and domestic results, which will determine the market's direction.