Equities failed to hold on to a relief rally on Friday as key indices fell sharply off the day’s highs and closed with a cut of around 1%, registering their fifth consecutive session of losses. The rise in crude oil prices due to escalating geopolitical risks and concerns over foreign funds preferring China over India continued to weigh on the investor sentiment.
The volatile session on Friday saw Sensex gyrate between 1,800 points and the Nifty slip below 25,000 points in intra-day trading. The Sensex closed down 809 points to 81,688.45 points and the Nifty fell 236 points to 25,014.60 points.
The Nifty and Sensex plummeted nearly 5% each for the week, marking their worst week since June 2022. This wiped out investor wealth worth over Rs 17 lakh crore on the BSE.
Foreign portfolio investors (FPIs) pulled out Rs 9,897 crore on Friday, as per provisional data, taking the total outflow for the week to Rs 37,039 crore (around $4.4 billion). On the other hand, domestic institutional investors (DIIs) bought Rs 33,074 crore of shares.
While FPIs have aggressively sold in India, they have been buying stocks in China on the back of stimulus measures announced by the government and relatively-attractive valuations, experts said.
“Interestingly, the move is currently made by China-dedicated funds. GEM (Global Emerging Market) funds have not shown a big shift yet. Foreign inflows into China-dedicated funds stood at $6.8 billion (this week) while GEM fund inflows into China were $240 million,” Elara Capital said in a note.
The Brent crude prices rose to a high of $79 per barrel on Friday due to concerns over the potential hit to supply amid ongoing tensions between Israel and Iran.
“Although OPEC+ has reaffirmed plans to increase output in December, concerns remain about potential impacts on Iran’s oil infrastructure. The key lesson here is that while we cannot predict the future, it’s important to have a high-level plan and not react in panic,” said Krishna Appala, senior research analyst at Capitalmind Research.
The surge in crude oil prices pinched oil-to-telecom conglomerate Reliance Industries as its stock tumbled 9%, and was the worst performer among Nifty companies. Shriram Finance, Axis Bank, and Bharat Petroleum Corp were the other major losers.
Among sectors, real estate, automobile and financial services bore the brunt of heavy selling. All the sectoral indices, barring metals, ended lower for the week.
Market participants believe the volatility is likely to continue in the upcoming week as investors will continue to track the developments in West Asia and react to the US monthly employment data.
“With the start of the earnings season next week, stock-specific action will continue. Also, the focus will remain on interest-sensitive stocks amid the RBI policy meeting,” said Siddhartha Khemka, head – research, wealth management, Motilal Oswal Financial Services.