In a volatile trading session, Indian equity markets witnessed a sharp decline on Friday, with the benchmark indices closing significantly lower. The BSE Sensex plummeted 808.65 points or 0.98 per cent to end at 81,688.45, while the Nifty 50 fell 200.25 points or 0.79 per cent to close at 25,049.85.
The sell-off was primarily attributed to rising geopolitical tensions in the Middle East, which pushed crude oil prices higher and dampened investor sentiment. Brent crude surged by $5.5 per barrel to $78, raising concerns about inflationary pressures and potential delays in interest rate cuts.
Market breadth remained negative, with 2,387 stocks declining against 1,563 advances on the BSE. The mid-cap and small-cap indices outperformed large-caps, losing 3.1 per cent and 1.8 per cent respectively over the past week, compared to the 4.2 per cent decline in the Nifty-50 and Sensex.
Among sectoral indices, metals emerged as the only major gainer, while realty, auto, capital goods, oil and gas, and banks were the top underperformers. The volatility index, India VIX, surged by 7.27 per cent to settle at 14.13, indicating increased market uncertainty.
Top gainers on the NSE included Infosys (1.51 per cent), ONGC (1.18 per cent), HDFC Life (1 per cent), Tata Motors (0.85 per cent), and Wipro (0.65 per cent). On the flip side, M&M (-3.54 per cent), Bajaj Finance (-2.86 per cent), Asian Paints (-2.40 per cent), Nestle India (-2.33 per cent), and BPCL (-2.31 per cent) were the major losers.
Shrikant Chouhan, Head of Equity Research at Kotak Securities, commented on the week’s performance, saying, “Indian Markets underperformed most global markets. The increase in geopolitical tensions between Israel and Iran weighed on risk assets, while crude oil rose by US$5.5/bbl to US$78/bbl.”
Ajit Mishra, SVP of Research at Religare Broking Ltd, noted, “The ongoing geopolitical tensions have driven crude prices higher, dampening hopes for a rate cut by the RBI in the upcoming policy meeting. Additionally, noticeable selling by foreign investors is adding to the market’s strain.”
Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd, provided a technical perspective, stating, “On the downside, the short term swing support of 24750 will act as a key support. If index manages to defend 24750 then relief rally towards 25,500 could be possible.”
Amol Athawale, VP of Technical Research at Kotak Securities, added, “For the short-term traders now, 50 day SMA or 25000/81800 would act as a sacrosanct support level. Above the same, we could see one technical pullback rally till 25200/82400.”
The market witnessed 190 stocks hitting 52-week highs, while 66 touched their 52-week lows. Eleven stocks reached the upper circuit, and four hit the lower circuit.
Ameya Ranadive, Sr Technical Analyst at StoxBox, observed, “The Indian markets experienced continued losses, marking the worst trading week in over two years, driven by rising foreign outflows and escalating conflicts in the Middle East.”
As the market looks ahead, investors will be closely monitoring global cues, particularly the geopolitical situation in the Middle East and its impact on crude oil prices. The upcoming RBI policy meeting and corporate earnings reports are also expected to influence market sentiment in the coming weeks.