India's Nifty 50 index has entered the correction zone, falling over 10% from its peak in late September. This decline comes as foreign investors continue their record-level selloff of domestic stocks, triggering broad market losses. On Tuesday, the Nifty 50 dropped by 1.4%, reaching a decline of 10.04% since its record high on September 27. The Sensex, India's 30-stock index, has also experienced a significant fall, though it has not yet breached the 10% correction level.

The sharpest declines have been seen in the automobile and real estate sectors, with the Nifty Auto and Nifty Oil and Gas indices dropping more than 17%. Other sectors like realty and energy also saw steep losses, while media, metal, and FMCG indices fell more than 10% from the September peak. In contrast, the information technology (IT) sector managed to stay positive, albeit marginally, amidst the broader market selloff.

Foreign funds have been heavy net sellers, offloading stocks worth over Rs 1.50 lakh crore since September 27, according to National Stock Exchange (NSE) data. Meanwhile, domestic institutional investors have acted as net buyers, purchasing shares worth Rs 1.38 lakh crore during the same period, indicating contrasting sentiment between local and foreign investors.

Global investment bank Goldman Sachs has downgraded Indian stocks to a "neutral" position from "overweight" within its Asia and emerging market allocation. This downgrade reflects concerns over slower economic growth and subdued corporate profits, which have been major factors behind the cautious outlook.

Stocks like IndusInd Bank, Asian Paints, Bajaj Auto, Hero MotoCorp, and Shriram Finance have seen declines of more than 20% since the end of September. IT stocks, particularly Wipro, Tech Mahindra, and HCL Technologies, have remained among the few stocks in the Nifty that have posted gains.

The poor performance in Q2 earnings from many domestic companies, coupled with a slowdown in the economy, has added to investor caution. Jefferies, a global brokerage firm, has cut its fiscal 2025 earnings estimates for over 60% of the 98 companies it covers, marking the highest downgrade ratio since early 2020.