Dalal Street investors remained on edge this Friday as Indian equity benchmarks extended their losing streak for a fifth consecutive week. The NSE Nifty 50 fell 0.3% to settle at 23,398.1, while the BSE Sensex declined 0.2% to finish at 74,781.76. A combination of surging energy costs and rising US bond yields has created a cautious atmosphere, preventing any sustained upward momentum despite a brief recovery during the afternoon session.
The primary catalyst for the market's anxiety was Brent crude, which saw its November futures trading at $104.1 per barrel. This marks the first time since May that oil has breached the $100 threshold, posing a significant threat to India's inflation management and fiscal deficit. As a major importer of oil, the Indian economy is particularly sensitive to these price spikes, which often lead to immediate selling pressure across sectors like paints, aviation, and logistics.
- Nifty and Sensex Weekly Loss — The indices fell 2.1% and 2.3% respectively over the five-day period
- Crude Oil Surges — Brent crude crossed the $100 mark to trade at $104.1 per barrel
- Volatility Index Rises — The Nifty VIX increased by 4% to reach 12.27 levels
According to Shrikant Chouhan, the head of equity research at Kotak Securities, the market saw some respite in the second half of the day as traders lightened their positions. "We saw some respite in the markets in the second half of the day, as traders lightened positions, with some short covering ahead of the extended three-day holiday weekend," Chouhan stated. He noted that the upcoming release of CPI numbers and developments at the BRICS summit would be the next major triggers for the market.
Technical experts are also weighing in on the current correction. Ruchit Jain, who leads equity technical research at Motilal Oswal Financial Services, pointed out that the Nifty is now approaching a key support zone between 23,000 and 23,200. With the Relative Strength Index (RSI) indicating oversold conditions, Jain suggested that a near-term bounce toward the 23,800 level could be on the cards, provided global cues stabilize.
The broader market was not spared from the downturn, as the Nifty Midcap 150 dropped 0.3% and the Nifty Small-cap 250 fell 0.5% on Friday. For the entire week, these indices have declined 1.4% and 0.8% respectively. The Nifty Volatility Index (VIX), often referred to as the market's fear gauge, climbed 4% to 12.27, reflecting the growing uncertainty among retail and institutional participants alike.
Institutional activity showed a clear divide on Friday. Foreign Portfolio Investors (FPIs) remained net sellers, offloading shares worth ₹931 crore. In contrast, Domestic Institutional Investors (DIIs) attempted to cushion the fall by purchasing equities worth ₹1,968 crore. This tug-of-war between global selling and domestic buying has been a recurring theme over the past month, as the Federal Reserve rate debate continues to influence global capital flows.
The weakness in Mumbai mirrored a broader sell-off across Asia. Japan's market tumbled 1.9%, while China and South Korea saw declines of 1.2% and 1.8% respectively. Taiwan also dropped 1.6%, highlighting the regional impact of rising yields and energy prices. However, the European markets showed some resilience, with the Stoxx 600 trading up 0.8% during the Indian market's closing hours.
Despite the prevailing gloom, some analysts believe the worst of the correction might be over. Chouhan mentioned that markets appear deeply oversold after nearly a month of weakness. He argued that even if oil prices spike further, the move might not be sustainable as elevated costs eventually dampen global demand. For now, Dalal Street remains in a 'wait-and-watch' mode, looking for any sign of a trend reversal in bond yields or a cooling of geopolitical tensions.
