Stock markets fall for second day as selling in Reliance Industries, HDFC Bank dents sentiment

On Tuesday January 6 2026 the Indian stock market had a day for the second day in a row. This happened because people sold a lot of shares of companies like Reliance Industries and HDFC Bank. There are also worries about the economy. What is happening in the world like the new comments about tariffs, from the United States. All these things made investors nervous. They did not want to take risks. The Sensex and Nifty went down from their points and the overall market was not doing well. People made a lot of money from selling shares of companies, especially Reliance Industries, which lost a lot of its value. Reuters and Business Standard and LiveMint and Economic Times and Outlook Business all had the news, about these moves and what caused them.

1) So what actually happened. Can you just give me the facts

The two major indices — the BSE Sensex and the NSE Nifty50 — closed lower on January 6, 2026, marking their second day of losses after a recent run toward record highs.

Reliance Industries (RIL) was one of the worst performers, dropping roughly 4–5% intraday and erasing tens of thousands of crores of market value in a single session. Several outlets reported RIL’s market value falling by roughly ₹90–94k crore on that day.

HDFC Bank also slipped—reports described a multi-day pullback after a Q3 update, with the stock touching multi-month lows and contributing materially to the overall market weakness.

Other heavyweight names such as ITC, Kotak Mahindra Bank and InterGlobe Aviation were among laggards; a few counters (ICICI Bank, Sun Pharma, HUL, SBI) bucked the trend and closed positive.

These are the things that are really happening in the market and we can be sure they are true. The rest of this explanation will tell us why these things are happening, how they are happening and what people who invest their money might do next.

2) So I was thinking about why Reliance and HDFC Bank were such a deal today. These two companies, Reliance and HDFC Bank really made a lot of news. People were talking about Reliance and HDFC Bank all day. The reason Reliance and HDFC Bank were so important is because of what happened with them. Reliance and HDFC Bank are really companies and when something happens to them it affects a lot of people. That is why everyone was paying attention to Reliance and HDFC Bank today.

There are two companies that really stand out from the rest. These two companies matter more than companies because they are very large weights, in the indices:

Reliance Industries is the company in India when you look at how much it is worth on the market. It is also a part of the Sensex and the Nifty. So when Reliance Industries moves it has an effect on the whole index.

On January 6 the stock price of Reliance Industries fell sharply. This happened for two reasons. First there were a lot of news reports that said Reliance Industries was getting oil from Russia and using it at its refinery in Jamnagar. Second some people were selling their shares of Reliance Industries to make a profit because the stock had just reached highs. Reliance Industries said these reports about crude oil were not true but the damage was already done and the stock price was all, over the place. Reliance Industries had an impact because of this. The denial didn’t immediately restore confidence because markets move fast and liquidity / flows amplify headline shocks.

HDFC Bank is one of the largest financials on the indices. Banking stocks drive a large portion of index performance in India because financials represent a large slice of market cap. HDFC Bank’s slide followed its Q3 business update (which, while showing growth, may have contained elements that investors read as less than stellar for deposit traction or margin outlook). Sequential negative surprises in such a large bank cause index pressure and can also feed worries about systemic banking momentum.

When you look at these two names they are really parts of the main index. So if people start selling a lot of these stocks it can bring down the index even if some other stocks are doing okay. This happens because these names are so big, in the index.

3) Triggers and catalysts — short term vs structural

So you want to know what really caused people to start selling. If this trend is going to keep going. Think about what triggered the selling of the stocks and whether the selling is likely to persist. The question is what triggered the selling and will it continue.

Immediate / news triggers (short term):

Media reports and rumors around Reliance’s crude sourcing — a Bloomberg story (and subsequent media flow) about shipments linked to Russian crude appears to have spooked traders; RIL denied the specific report but volatility and stop-losses had already been triggered. News — true or denied — moves markets quickly, especially high-beta, high-visibility stocks.

Company-specific updates (HDFC Bank) — earnings or business updates that disappoint expectations (even marginally) can amplify selling in large-cap banking stocks.

Macro/geopolitical worry — fresh U.S. tariff warning — reporting of a renewed U.S. warning about potential tariff increases against India created a broader risk-off overlay, tilting global/foreign investor sentiment. News about trade friction can be a negative catalyst for indices and for stocks exposed to trade/tariff risks.

Structural / technical and flow-based drivers (medium term):

Profit-booking at highs: indices had run near record levels. When major gainers or index leaders look stretched, institutional investors sometimes book profits, creating vulnerability to a domino of selling.

Index concentration: with large weights concentrated in a handful of names, market moves can be lopsided—index falls may overstate the breadth of weakness. When market leadership gets punished, headline indices can fall even if many smaller caps are stable.

When we talk about money coming into India from countries to buy Indian stocks we have to consider a few things. The money coming into stocks is really affected by what is happening with interest rates around the world how strong the United States dollar is and what is going on in the news about other countries. If any of these things change it can cause the Indian stock market to go down because it is already a little unstable. Foreign portfolio flows into equities are really sensitive to global yields the strength of the United States dollar and headlines about what is happening in other countries. Any change in these things can cause a pullback, in the stock market.

4) Let us talk about market internals and what they tell us about the market. Market internals are really important. They give us a lot of information about what’s going on in the market. Market internals tell us about the health of the market. We can learn a lot from market internals. Market internals are like a report card for the market. They show us what the market is doing and where it is going. We need to pay attention to market internals to understand the market. Market internals are very useful, for people who invest in the market.

Breadth: reports mentioned that heavyweights dragged headline indices; some mid- and small-caps were less affected. This suggests the move was at least partially concentrated rather than a full systemic unwind.

Volume: Reliance’s trading volume spiked versus its 50-day average, indicating real liquidation rather than thin-market noise. High volume on declines is a bearish technical signal for the affected stock.

Volatility is when a big stock makes a move of 4 to 5 percent. This big move increases the volatility that people think will happen and the volatility that actually happens. The people who work with derivatives have to balance their books when this happens. They do this by hedging, which’s like making a bet that the stock will go in the opposite direction. This hedging can make the stock move more in the short term, which is a pretty short period of time. Volatility like this can really affect the desk and the way they do their job. The big move in the stock can feed into the way the derivative desk does their hedging. That can amplify the moves the stock makes. Volatility is a deal, for the people who work with derivatives and it can make their job more complicated.

5) Macro backdrop — why markets are jittery even before this

So you want to know why the news, from one day can cause big changes. Well there are some things that were already going on that you should think about:

Recent record/near-record index levels: markets that have rallied strongly are more prone to sharp corrections as investors reassess valuations.

Global uncertainties: trade tensions, central bank policy trajectories, or geopolitical headlines often act as multipliers for domestic news. The U.S. tariff warnings were explicitly cited as an overlay that worsened sentiment on Jan 6.

Earnings season and corporate updates are really important. This is the time when a lot of companies share their results or updates. When this happens the market pays a lot of attention to what each company has to say. The market gets very sensitive, to each report that comes out during this time. Earnings season and corporate updates can really move the market.

6) Practical investor implications (for retail and institutional investors)

(This is the “what should I do?” section — not financial advice, but practical frameworks.)

For long-term investors:

A single two day drop in the stock market does not change the long term basics of run businesses like the core holdings. The core holdings have returns, on equity and healthy balance sheets and strong cash flows. So when the stock price of these core holdings goes down a little it is a time to buy more of the core holdings.. You should always check if the reason you bought the core holdings in the first place is still a good reason to own the core holdings.

When you want to invest in something it is an idea to use tranches. What this means is that you buy a bit at a time rather than trying to figure out the best time to buy it all at once. So you buy one tranche, another tranche and maybe even another tranche, after that. This way you can add tranches to what you already have instead of trying to time it perfectly and buy everything at the lowest price, which can be really hard to do. Using tranches is a way to add more exposure to something without having to worry about finding the single best time to buy it all.

For short-term / traders:

You have to respect stop-losses and liquidity. This is important because big gaps, in the market often caused by news can lead to slippage.

Options are a tool that can be used for hedging. The thing is, options require a lot of expertise to use them properly. Respect stop-losses and liquidity when dealing with options.

You need to be careful of something called “headline whipsaw”. This is what happened with Reliance Industries Limited. They said some reports were not true and that made the price go down.. Things can change really fast in this kind of situation. The news can suddenly go the way and that can create what we call whipsaw opportunities. These opportunities can be good for people who’re quick to act.. They can be very bad, for people who have borrowed a lot of money to invest because they can lose a lot if things do not go their way. Reliance Industries Limited can be affected by this kind of situation so you have to be careful when you are dealing with Reliance Industries Limited.

For portfolio managers:

We need to think about something called re-weighting. This means we have to consider if the index concentration risk is getting bigger. We also have to think about if the portfolio needs to be rebalanced. The reason for this is to reduce the risk of having much money in one single investment, which is also known as single-name exposure. This is important, for the portfolio.

Volatility protection: review options or cash buffers to manage marked-to-market losses, especially during earnings and geopolitical risk windows.

7) What is going to happen with the short-term outlook. We need to think about what comes with the short-term outlook. The short-term outlook is important. We should consider what will happen with the short-term outlook.

Possible rebound: if RIL’s denials and clarifications dampen the rumor cycle and if there are no fresh negative datapoints, heavy oversold reactions could attract short-covering and bargain hunters — leading to a rebound in the affected names and indices.

Prolonged consolidation: if the tariff rhetoric escalates or if corporate updates disappoint further, markets could enter a multi-session consolidation where indices trade sideways and leadership rotates.

Things are still really unpredictable with the market. We can expect to see changes in the prices of things during the day until we have a better idea of what is going on with the big picture. This means we need to wait for some confirmation on things like tariffs how much money is moving around or what companies are saying about their plans. Until then the market is going to keep being really volatile. Volatility is going to stay high. The market for things like stocks is going to keep changing a lot during the day. We just have to wait for an idea of what is happening with the big things, like tariffs and corporate guidance.

8) Things to look out for on the charts if you are into that sort of thing like signals. Technical signals are really important, to some people. Here are the technical signals to watch. Watching signals can be useful and these are the technical signals.

To understand what is going on with the market we need to look at the support levels.

We have to watch what is happening with the Sensex and the Nifty and with individual stocks.

The Sensex and the Nifty are like the players in the market.

We need to check the 50-day moving averages for these and also the previous consolidation lows for stocks.

If the Sensex or the Nifty or any individual stock goes below these levels with a lot of volume that is a sign for the market.

On the hand if the Sensex or the Nifty or any individual stock holds at these levels and then starts going up with a lot of volume that could be a good sign, for the market.

So we have to keep an eye on the support levels of the Sensex and the Nifty and individual stocks.

When we look at Put/Call and Options data we can see that people are buying puts. This is also called a rising put buying or skew. It means that investors are getting a little scared and they want to protect themselves. They are doing this because they think the market might go down. We should keep an eye on what happens to open interest when it’s time to roll over options around the expiry dates. This can tell us a lot, about what Put/Call and Options data’s really saying about the market. Put/Call and Options data is very important to watch.

Volume confirmation: price moves without volume confirmation are less reliable. Strong, high-volume declines are more meaningful.

9) Big picture — is this the start of a bear trend?

That is not necessarily true. We have had two days and some big companies have lost a lot of value but that does not mean we are in a bear market. The thing that sets a correction apart, from a bear market is how long it lasts how many companies are. Whether it keeps happening.

When the market has a drop of more than 10 percent from its highest point but it only takes a few weeks or months to get back on track that is not so bad. This is because it does not happen at the time as big problems with the overall economy that last for a long time. The market drop is. The economy is still doing okay. The big drop in the market than 10 percent, from its highest point is not a reason to worry if it only lasts for a few weeks or months and the economy is still good.

Bear market: deeper, longer, and accompanied by spreading weakness across sectors, recessionary signals, and sustained liquidity tightening.

As of the Jan 6 moves, the weakness appeared concentrated in a few big names and tied to specific news items — which suggests a correction/volatility event rather than a multi-month bear phase, unless macro data or global risk appetite worsens dramatically.

10) So I want to talk about how the analysts and the media looked at what happened on this day. They basically summed it up quickly. The analysts and the media framed the day in a way. The analysts and the media did this to help people understand what was going on.

The way the analysts and the media framed the day was important because it showed us how they saw things.

The analysts and the media gave us an overview of the day.

This is how the analysts and the media framed the day.

Reuters framed the move as a slip from near-record highs with Reliance and HDFC Bank weighing on trade — a succinct, market-structure view.

Business Standard and LiveMint emphasised the scale of RIL’s fall and the market-cap erosion, and discussed profit-taking & volatility after recent highs.

OutlookBusiness/OutlookMoney and The Week highlighted the combined effect of stock-specific selling and external concerns like U.S. tariff warnings.

11) Here is a checklist that an investor can go through after a day like this.

An investor should take a look at the investors portfolio.

The investor needs to think about what the investor’s going to do next.

Some things the investor can do include:

* Checking to see how the investors stocks are doing

* Looking at the news to see what is going on with the companies the investor has invested in

* Thinking about whether the investor wants to buy or sell any stocks

The investor should always keep an eye on the investors money and make sure the investor is making decisions about the investors investments.

This is what an investor can do after a day, like this.

Take a look at the reasons you invested in each company: has something big changed for each investment? Go over your investment ideas, for each company you own: are there any changes that affect each investment? Think about why you bought each stock: has something important changed for each one?

Check diversification and single-name exposure: is any position too large relative to your risk tolerance?

When you want to add to your positions you should have some rules in place especially if you are planning to buy during dips.

You should use the sizes that you decided on beforehand and try not to make decisions based on how you feel.

This means you will add a set amount of money to your positions each time and you will not try to average out your costs by buying more when the price’s low.

You have to stick to your rules and not let your emotions get in the way so you do not end up with a mess.

Use your -defined allocation sizes for adding to positions and avoid making emotional decisions like trying to average your costs when you buy dips.

When you are buying or selling something it is an idea to use limit orders. This is because limit orders let you have control over the price. You should also think about how many people’re buying and selling which is called liquidity. Sometimes there are gaps in the price and this can cause problems, which is called slippage. To avoid slippage it is better to use limit orders if you want to be, in charge of the price. Limit orders are a choice when you want to make sure you get the price you want.

Avoid overreacting to headlines: confirm facts from reliable sources; as seen with Reliance denials, initial headlines can be amended.

12) Final takeaways

The Jan 6 market drop was driven by concentrated selling in heavyweight names (Reliance, HDFC Bank) plus macro/geo-political worry (tariff headlines). Because of index concentration, headline falls may overstate the breadth of weakness.

Short term: expect elevated volatility and the possibility of quick rebounds if clarifications arrive and no new negatives crop up. Medium term: monitor whether selling broadens to mid/small caps or if global macro risks intensify — that would change the narrative from a correction to something more serious.

For investors, the sensible path is to review fundamentals, manage single-name concentration, and use defined rules for buying or hedging — avoid knee-jerk portfolio overhauls based on one or two volatile sessions.