Indian equity benchmarks logged their biggest monthly loss in nearly a year, as lingering uncertainty over U.S. trade policy and a subdued earnings season triggered sustained foreign selling ahead of the federal budget on Sunday.
The Nifty 50 lost 3.1% to 25,320.65 and the BSE Sensex lost 3.5% to 82,269.78, marking their steepest monthly drop since February 2025.
On the day, the two benchmarks slipped 0.4% each.
Foreign investors sold $4 billion worth of domestic equities this month, which also pushed the rupee to fresh record low.
"Earnings have been anaemic and there is little for foreign investors to get excited about at current valuations, especially when other North Asian markets offer better value and exposure to themes such as artificial intelligence," said Sat Duhra, portfolio manager at Janus Henderson Investors.
The U.S. tariff impasse has further dampened risk appetite, Duhra said.
Broader Asian markets gained 9.4% in January.
Eleven of the 16 major sectors logged monthly losses.
Fast-moving consumer goods lost 7.7%. Cigarette maker ITC fell 20.1%, posting its worst monthly drop in more than 25 years, on worries of a hit to future earnings from excise duty on cigarettes effective February 1.
The broader small-caps and mid-caps fell 4.7% and 3.4%, respectively.
Investors now turn to the federal budget for cues on growth support from government capex and fiscal discipline. Markets expect higher defence spending to bolster local production as well as targeted support for export-oriented sectors hit by U.S. tariff headwinds.
India's equity markets are set to trade on Sunday in a special session.
Index heavyweight Reliance Industries fell 11.1% in January, posting its worst performance in about six years after missing December quarter profit expectations on muted retail segment growth.
On the day, metals slipped 5.2%, the biggest percentage loser among sub-indexes, as profit-taking set in. However, the index has gained 5.9% in January, driven by curbs on some Chinese steel imports and a spike in global prices.
