Sensex, Nifty Fall 2% to Extend Five-Week Losing Streak

Indian Markets Extend Decline as Oil Prices Surge and FII Selling Resumes

The Indian equity markets faced significant pressure this week, marking a five-week losing streak as rising oil prices and renewed foreign institutional investor (FII) selling weighed heavily on investor sentiment.

Market Performance Overview

The Sensex ended the week at 74,782, down 2.27%, while the Nifty 50 closed at 23,398, a decline of 2.1%. This marks a cumulative drop of nearly 5% over the last five weeks, the longest losing streak in five months. The previous streak lasted six weeks and was characterized by a 12% decline amid escalating US-Iran tensions.

The broader market, however, showed some resilience, with the Nifty Midcap 100 and Nifty Smallcap 100 indices declining by 1.4% and 0.9%, respectively. The sell-off was broad-based, with all major sectors except pharma and healthcare experiencing losses. Notably, the Nifty Realty index suffered the most, plummeting by 6.5%.

Impact of Rising Oil Prices

The surge in crude oil prices, which have remained above the $100 per barrel mark due to ongoing geopolitical tensions, has been a significant factor driving market sentiment. Analysts, including Vinod Nair from Geojit Investments, highlighted that the energy-led inflation narrative has dominated investor outlook, compounding the pressure on domestic equities.

The renewed selling by FIIs, who have withdrawn nearly ₹8,000 crore from the Indian markets in September alone, has further exacerbated the situation. This shift in fund flows comes after a brief period of net buying in July and August, indicating a cautious approach by foreign investors amid rising inflation concerns and tightening monetary policies.

Sector Performance and Investor Sentiment

The sell-off was widespread, with the Nifty IT and Nifty Financial Services sectors also facing significant declines of 5.8% and around 2%, respectively. The only sectors that managed to hold their ground were pharma and healthcare, which remained resilient amid the broader market downturn.

Despite starting the session down nearly 1%, both the Sensex and Nifty managed to recover slightly towards the end of the week, driven by a drop in crude oil prices and buying interest in blue-chip stocks like HDFC Bank and IT companies. On Friday, the Sensex closed down 0.16%, while the Nifty 50 fell by 0.34%.

Looking Ahead: Key Economic Indicators

As the markets prepare for the upcoming week, investors will closely monitor key economic indicators, including India’s August Consumer Price Index (CPI) and Wholesale Price Index (WPI) inflation data, alongside the US Federal Reserve’s policy decisions. Siddhartha Khemka from Motilal Oswal Financial Services noted that these factors, along with global crude prices and currency fluctuations, will remain critical for market direction.

Key Highlights

• Sensex and Nifty extended their losing streak to five weeks, down 2% each.
• Crude oil prices remain above $100 per barrel, impacting inflation sentiment.
• FIIs have pulled out nearly ₹8,000 crore from Indian markets in September.
• Nifty Realty index saw the largest decline at 6.5% this week.
• Investors will focus on upcoming inflation data and US Fed policy decisions.

Investor Note: The ongoing decline in the Indian equity markets highlights the importance of monitoring geopolitical developments and inflation trends, as these factors are likely to influence investor sentiment and market performance in the weeks ahead.