Benchmark equity indices snapped a two-week winning streak as investors resorted to profit booking amid concerns over rising crude oil prices, which surged 20% to $107.5 per barrel. Persistent geopolitical uncertainty due to lack of progress in US–Iran peace talks kept investors on edge as well.
Additionally, IT stocks came under significant selling pressure due to subdued earnings and weak guidance for the current fiscal.
Energy Concerns
The Sensex plunged 999.79 points (1.29%) to close at 76,664.21, while the Nifty declined 275.10 points (1.14%) to end below the 24,000 mark at 23,897.95 on Friday. This marked the third consecutive session of losses.
On a weekly basis, the Sensex and Nifty fell 2.33% and 1.87%, respectively, after registering gains in the previous two weeks — their worst weekly performance in six weeks. However, midcap and small-cap stocks outperformed large-cap peers, with the BSE Midcap and BSE Smallcap indices posting modest declines of 0.37% and 0.26%, respectively.
Investor wealth eroded by ₹4.15 lakh crore during the week, bringing total market capitalisation down to ₹461.5 lakh crore.
Foreign institutional investors (FIIs) sold shares worth ₹11,444.85 crore ($1.2 billion), while domestic institutional investors (DIIs) bought equities worth ₹9,782.05 crore during the week. On Friday alone, FPIs were net sellers at ₹8,827.87 crore ($936.6 million), while DIIs purchased equities worth ₹4,700.71 crore, according to provisional BSE data.
Institutional Flows
“A strong start to the week gave way to a late sell-off as geopolitical tensions weighed on the market,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities. “Surging oil prices, driven by supply concerns in the Strait of Hormuz, dampened investor sentiment,” he added.
The IT index emerged as the worst-performing sector both on Friday and for the week, falling 5.29% on Friday and 10.31% over the week. Except for Oracle Financial Services Software, all IT stocks ended in the red. HCL Tech was the biggest loser, plunging 16.58%, followed by Persistent Systems, Coforge, Infosys, Mphasis, and Tech Mahindra, each declining over 10% during the week.
“A disappointing earnings outlook from IT major Infosys triggered a sharp sell-off in the IT pack, further dragging benchmark indices lower,” said Ajit Mishra, SVP – Research at Religare Broking.
Despite the weak broader sentiment, the FMCG sector emerged as the top gainer, supported by strong earnings from Nestlé India, which raised hopes of a revival in urban consumption. Pharma and healthcare sectors also posted gains.
Among Sensex constituents, Nestlé India led the gains with a 10.56% rise in its share price, followed by Dr Reddy’s Laboratories, Tata Consumer, Trent, and Cipla.
Looking ahead, the coming week features a dense macroeconomic calendar that could significantly influence near-term market direction, said Vinod Nair, Head of Research at Geojit Investments.
He added that the US Federal Reserve’s rate decision and accompanying commentary will be key catalysts. “A hawkish stance could prolong pressure on emerging markets through a stronger dollar and sustained FII outflows, while the Bank of Japan’s policy decision adds another layer of global liquidity sensitivity,” he said.
