Benchmark equity indices fell by up to 2.70% during the week, marking their first weekly decline in three weeks, as hopes of any truce in West Asia faded and kept Brent crude oil prices on the boil.
A weakening rupee against the US dollar, coupled with continued foreign portfolio investor outflows, also dented investor sentiment. Brent crude oil prices surged 3.75% during the week to $109.7 per barrel, while the Indian rupee closed at a fresh record low of 95.97 against the US dollar.
On Monday and Tuesday, the Sensex and Nifty lost over 1.5% each, while Wednesday witnessed range-bound trading with little movement. Thursday saw a relief rally, largely driven by index heavyweights HDFC Bank and Bharti Airtel.
On Friday, the Sensex lost 160.73 points, or 0.21%, to close at 75,237.99, while the Nifty fell 46.10 points, or 0.19%, to end the session at 23,643.50.
For the week, the Sensex plunged 2.70% and the Nifty slumped 2.20%. Broader indices witnessed sharper declines, with the BSE Midcap and BSE Smallcap falling 3.19% and 3.59%, respectively — marking their steepest weekly decline in nine weeks.
Geopolitical Volatility
“Indian equities traded with a cautious and volatile undertone during the week, as the lack of meaningful de-escalation in geopolitical tensions and their implications for crude prices, inflation, and the rupee continued to dominate market sentiment,” said Vinod Nair, Head of Research, Geojit Investments.
Rising global bond yields and sustained dollar strength weighed on risk appetite, leading to intermittent FII outflows and continued pressure on the rupee, Nair added.
“The market remained volatile during the trading sessions and closed marginally lower mainly due to lingering fears around the possibility of renewed escalation in the Middle East conflict. However, there are hopes pinned on the outcome of the meeting between Trump and Xi, during which market participants expect some positive developments related to the Middle East situation as well. The weakening rupee remains a key concern,” said Joseph Thomas, Head of Research, Emkay Wealth Management.
Massive Wealth Erosion
Investors suffered a notional wealth loss of Rs 12.9 lakh crore during the week, of which Rs 2.26 lakh crore was eroded on Friday.
Foreign portfolio investors sold shares worth Rs 10,106.91 crore, while domestic institutional investors bought shares worth Rs 18,524.53 crore during the week.
During the week, realty, IT, consumer durables, auto, and PSU banks emerged as the top sectoral losers, falling by up to 8.17%, while pharma, healthcare, and metals were the only gaining sectors, rising by up to 2.18%.
Titan Company, Reliance Industries, Tech Mahindra, Mahindra & Mahindra, and Eternal were the top Sensex losers, declining by up to 7.64%. Titan Company and other gold jewellery companies came under selling pressure after the government hiked customs duty and imposed volume curbs on gold imports.
Among Asian markets, besides India, Indonesia (down 4.89%), Japan (down 1.72%), and South Korea (down 1.13%) were among the top losers during the week, while Singapore (up 1.92%) and Thailand (up 1.35%) emerged as the top gainers.