Sensex and Nifty posted the biggest ever weekly fall in absolute points — losing 1,850 and 614 points respectively — as bloodbath continued in the Dalal Street for the fifth consecutive week amid a depreciating rupee, boiling crude oil prices and intensifying volatility in the global markets. At their Friday’s closing levels, both the Sensex and Nifty have corrected 12% from their August record highs of 38,989.65 and 11,760.20 points.

Amid various macro concerns, what added to the carnage in the domestic equity markets was the Reserve Bank of India’s decision on Friday to keep the repo-rate unchanged at 6.50% with a change in stance from ‘neutral’ to ‘calibrated tightening’. Sell-off intensified in the market soon after as the RBI’s status quo on policy came as a surprise shock to market participants which were expecting a 25 bps rate-hike.

The Indian rupee tumbled down below the 74/$ mark for the first time ever to hit a record low of 74.22 against the greenback intraday following the RBI rate hold decision on Friday. While selling continued in the NBFC sector on continued liquidity concerns, PSU oil marketing companies were also in for a rude shock when the government on Thursday announced a cut in excise duty on auto fuels of Rs 1.50 per litre and a further cut of 1 rupee per litre by the state-owned oil marketing companies.

“Market continues to capitulate on account of weak sentiments associated with heightened volatility in money markets, rise in bond yields, depreciation of INR and sell-off in EMs. Sentiment for equity has turned tepid given heighten volatility in domestic and global financial markets,” said Vinod Nair, Head of Research, Geojit Financial Services.

“Oil and gas sector was the worst hit, lost 18% this week as OMCs were asked to absorb Rs.1/litre which will impact its profitability. Further RBI’s status quo on policy with marginal downside revision to inflation was quite surprising given the sharp upside risks to the inflation due to elevated crude oil prices and weaker rupee. INR hit a historic low of Rs 74 versus dollar and market dived to lower lows as risk of fiscal deficit and rise in US bond yield still impacting the outflow of foreign money,” Nair added.

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What to expect next week:

In the week ahead, the Sensex and Nifty are expected to take cues from both global and domestic macroeconomic data releases and further movement of the rupee. The markets are also likely to keep an eye on developments from the government and the RBI with regard to various macro concerns.

“On the economic data front, this week The International Monetary Fund will present its latest World Economic Outlook as it opens its annual meeting with the World Bank in Bali, Indonesia. US September inflation data is due on Thursday,” said VK Sharma, Head Private Client Group & Capital Market Strategy at HDFC Securities. “In India, data like IIP for August and CPI for September month will be announced this Friday,” he added.

On the technical front, the important levels for the Nifty for support are seen at the 10,100 and 10,050 levels. “At present, the market is fueled with volatility and we may see it further to remain as Nifty is now below its previous swing lows of 10,400 and 10,580. Next support is seen at 10,100-10,050 levels which is very important support for 2018,” said Mustafa Nadeem, CEO Epic Research.

According to Nadeem, a breach below those levels could be seen as an extension to as low as 9,100- 9,200 for the Nifty index. “As a perspective, 10,100-10,200 was expected given the wave structure and close below 10,700, but it could get scary for investors below 10,100. We continue to remain to sell on high for lower targets but also suggest to utilise the bounce in index towards above-mentioned resistance of 10,580,” added Nadeem.

Key takeaways this week:

Weekly losses: The Sensex tanked 1850.15 points or 5.1% to close the week at 34,376.99 points. The Nifty 50 of the National Stock Exchange plunged 614.46 points or 5.61% to end at 10,316.45 points week-on-week.

“Nifty Midcap and Smallcap indices have plunged 26% and 39% from their respective all-time highs registered in January 2018. Nifty has now turned negative on YTD basis with a fall of 2%. Markets have corrected 13 % from the top,” said VK Sharma. “Depreciating rupee buoyed the information technology large caps stock and that was the only sector bucked the trend,” he added.

Top weekly Sensex losers: Bharti Airtel (-16.67%), ONGC (-16.51%), Reliance Industries (-16.21%), Mahindra & Mahindra (-12.28%) and Hero MotoCorp (-11.35%).

Top weekly Sensex gainers: Yes Bank (1.48%) and Wipro (1.47%)

FII/DII activity: Provisional data from the stock exchanges showed that foreign institutional investors sold stocks worth Rs 9,522.44 crore during the truncated week ended October 5. Domestic institutional investors, on the other hand, purchased stocks worth Rs 6,933.07 crore.

There was no trading in the domestic equity, currency and commodities markets on October 2 on account of Gandhi Jayanti.