Equities extend losing streak to five weeks as crude oil, FII selling weigh

Equity benchmark indices extended their losing streak to five weeks on Friday, as rising oil prices and renewed selling by foreign institutional investors (FIIs) dragged the markets lower. 

The Nifty 50 and Sensex ended the week down about 2 per cent at their lowest levels since June 11. The decline for five consecutive weeks resulted in a nearly 5 per cent fall in the two benchmark indices.

The Sensex ended the week 2.27 per cent lower at 74,782, while the Nifty 50 declined 2.1 per cent to 23,398 as markets reacted to the escalating US-Iran tensions and the subsequent rise in oil prices.

"Domestic equities ended the week decidedly lower, extending the corrective trend, as an energy-led inflation narrative dominated sentiment. Crude sustaining above the $100 per barrel mark, on continued hostilities and retaliatory action in West Asia, remained the central variable through the week. Compounding the pressure, the fund flow environment turned increasingly challenging as expectations of synchronised monetary tightening gained traction," said Vinod Nair, Head of Research, Geojit Investments.

The broader market continued to outperform, with the Nifty Midcap 100 and Nifty Smallcap 100 declining 1.4 per cent and 0.9 per cent, respectively, during the week.

The ongoing weekly decline is the longest in five months. The previous longest losing streak lasted six weeks and ended on April 3, when the indices had fallen about 12 per cent as the onset of the US-Iran conflict spooked global markets.

The sell-off in the just-ended week was broad-based as all major sectors, except pharma and healthcare, logged weekly losses. Nifty Realty logged the biggest decline at 6.5 per cent. Nifty IT was down 5.8 per cent, followed by about a 2 per cent fall in Nifty Metal, Nifty Oil & Gas and Nifty Financial Services.

The continued decline in the market came as foreign investors resumed selling after a brief period of net buying in July-August. In September, FIIs have pulled out nearly ₹8,000 crore (as of Thursday).

On Friday, the Sensex and Nifty ended marginally lower despite starting the session down nearly 1 per cent. The recovery, according to experts, was driven by a drop in crude oil prices and buying in blue-chip HDFC Bank and IT stocks. The Sensex ended the day down 0.16 per cent, while the Nifty 50 declined 0.34 per cent.

In the coming week, experts said, the market will track inflation data and the US Fed policy decision.

"Investors will focus next week on India’s August CPI and WPI inflation, the US Fed policy decision next week, US retail sales and industrial production, with crude prices, the rupee and global yields remaining key market monitorable," said Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services.