After a surprising bounce back, benchmark indices continued their southward journey on Friday amid weak global cues and war-related concerns. For the week, the Sensex and Nifty declined 2.91% and 2.89%, respectively – their biggest decline in a year.
On Friday, the Sensex declined 1,097 points or 1.37% to close at a 10-month low of 78,918.90, largely dragged down by selling in banking stocks. ICICI Bank (279 points), HDFC Bank (270 points), SBI (98 points), and Axis Bank (84 points) together accounted for 730 points, or 67%, of the Sensex’s 1,097-point fall.
The Nifty fell 315.45 points or 1.27% to end the session at 24,450.45.
Anatomy of the 1,000-Point Drop
Madhu Nair, Chief Executive Officer of Union Asset Management Company, said predicting the market’s short-term direction is difficult. The market will stabilise once the uncertainty fades, but it remains unclear whether the war will end in the next 5–10 days or take longer. If the conflict prolongs, the pain could persist for an extended period.
“Valuations are very attractive at this point in time,” Nair said. “Our comfort comes from valuations. Events such as the US–Iran conflict dislocate markets and create opportunities for long-term investors to take constructive positions in equities,” he added.
“Investor sentiment remained guarded amid lingering geopolitical uncertainties and elevated crude oil prices, which continue to influence global risk appetite,” said Ajit Mishra, SVP – Research at Religare Broking.
FPIs Sell, DIIs Accumulate
Industry players also remained selective ahead of the weekend, preferring to trim positions following the sharp swings witnessed earlier in the week, Mishra added.
Investors’ wealth eroded by Rs 13.82 lakh crore during the week, taking the total market capitalisation of BSE-listed companies down to Rs 449.68 lakh crore, including a Rs 3.22 lakh crore decline on Friday.
Foreign portfolio investors (FPIs) sold shares worth Rs 21,562.70 crore ($2.3 billion) during the week, including Rs 6,030.38 crore ($657 million) on Friday. In contrast, domestic institutional investors (DIIs) bought shares worth Rs 32,787 crore during the week, including Rs 6,971.51 crore on Friday.
Market breadth remained negative in three out of four trading sessions during the week. Markets were closed on Tuesday on account of Holi. Broader indices saw sharper declines, with the BSE MidCap and BSE SmallCap indices falling 3.29% and 3.35%, respectively.
Among sectoral indices, PSU banks were the worst performers, declining 6.71% during the week, followed by realty, oil & gas, services, and financial services, each falling over 4%. Capital goods (up 0.23%) was the only sectoral gainer.
InterGlobe Aviation, L&T, Tata Steel, Bajaj Finserv, and Eternal were the top Sensex losers, declining by up to 8.68% during the week.
Despite a 9.63% surge on Thursday, South Korea’s Kospi Index ended up being the worst performer in Asia, falling 10.56% for the week. Indonesia, Thailand, Japan, and Taiwan were the other major losers, each declining by more than 5.5%.