Why Are Indian Stock Markets Struggling? Insights on Recent Trends
Market Overview
Mumbai: The benchmark equity indices, Sensex and Nifty, faced declines for the fourth consecutive session on Friday, as crude oil prices surged past USD 114, raising concerns among investors due to escalating tensions in West Asia.
A widespread sell-off across various sectors, coupled with foreign institutional investor (FII) outflows and unfavorable global trends, further dampened market sentiment.
Initially, the 30-share BSE Sensex opened positively but later plummeted by 797.02 points, or 1.08%, reaching an intraday low of 72,452.37. It managed to recover slightly, closing at 73,123.83, down 125.56 points, or 0.17%.
Similarly, the 50-share NSE Nifty fell by 87.65 points, or 0.39%, finishing at 22,600 after hitting a low of 22,372, down 315.65 points, or 1.39%.
Among the Sensex constituents, Tata Steel and Adani Ports were the biggest losers, each dropping over 3%.
Other companies like Trent, Tech Mahindra, Bharat Electronics Ltd, IndiGo, Bajaj Finserv, Kotak Mahindra Bank, Titan, Bajaj Finance, NTPC, State Bank of India, and Hindustan Unilever also saw declines.
Conversely, stocks such as Eternal, Larsen & Toubro, Reliance Industries, Tata Consultancy Services, UltraTech Cement, Asian Paints, Maruti Suzuki India, Infosys, and ICICI Bank experienced gains.
Brent crude, the global oil benchmark, rose by 1.10%, trading above USD 114.42 per barrel.
Gaurav Garg, Head of Research at a brokerage platform, noted, "Market sentiment remains fragile as worries about supply disruptions in global energy markets overshadow selective buying in IT stocks. The rise in Brent crude prices, driven by tensions in West Asia, raises concerns about inflation, the rupee, and corporate margins."
Vinod Nair, Head of Research at Geojit Investments Ltd, commented, "Today's market is primarily concerned about the significant correction in mid- and small-cap stocks compared to the Nifty. Valuation worries and the unwinding of leveraged positions, along with rising crude prices and weak global signals, have intensified pressure on the broader market."
"The increase in India VIX suggests that volatility will persist in the near term. Ongoing tensions in the Middle East could keep crude prices elevated, while the AI-driven global equity sell-off continues to impact risk appetite," Nair added.
On Thursday, foreign institutional investors sold equities worth Rs 3,458.70 crore, while domestic institutional investors purchased shares worth Rs 2,891.32 crore, according to exchange data.
Asian markets managed to recover from early losses, with Shanghai's SSE Composite Index, Hong Kong's Hang Seng, and South Korea's Kospi closing in positive territory. However, Japan's Nikkei 225 benchmark ended lower.
European markets were in the red on Friday, and US equity markets also closed lower in overnight trading on Thursday.
On Thursday, the BSE Sensex fell by 460.30 points to close at 73,249.39, while the NSE Nifty dropped by 123.70 points, settling at 22,687.65, marking a three-day decline.