Key Takeaways
- Indian shares fell on Friday and logged weekly losses.
- The benchmark Nifty 50 and Sensex lost 2.4% and 2.2% respectively this week.
- Higher oil prices amid Middle East tensions dampened market sentiment.
Indian stock markets experienced a significant downturn on Friday, with the benchmark Nifty 50 and Sensex recording weekly losses. The Nifty 50 fell 0.39% to 22,600, and the Sensex shed 0.17% to 73,123.83, marking a 2.4% and 2.2% decline for the week, respectively.
The surge in oil prices, particularly Brent crude oil futures, which rose to about $114 due to concerns over energy supply amid attacks on Saudi Arabia, played a crucial role in dampening market sentiment. Rushabh Sheth, co-founder and co-CIO at Karma Capital, highlighted that oil is an immediate pressure point, while the impact of a weaker monsoon on water availability is a slower-burning risk.
Analysts at SMC Global and Motilal Oswal Financial Services noted that the demand for Jio Platforms' record $3.2 billion IPO, which swelled to 13.8 times, drained liquidity during the week. This, combined with the broader small-caps and mid-caps underperforming, losing 7.3% and 5.6% respectively, and the worst week in 20 months, contributed to the overall market decline.
Consumer durables, energy, FMCG, and auto sectors faced significant losses, with higher oil prices dampening earnings outlook for companies that rely heavily on crude as a key raw material. The heaviest-weighted benchmark stock, HDFC Bank, lost 5% during the week after missing quarterly profit estimates. Axis Bank and Bajaj Finance also saw losses of 5.6% and 5.4%, respectively, as concerns over pressure on lending margins outweighed a rise in quarterly profits.
The day's performance was particularly grim, with Swiggy tumbling 16.8% to a record low, raising concerns over the company's ability to turn around its quick-commerce unit and margins in its food delivery business. Colgate-Palmolive India also dropped 4.8% after its quarterly profit missed estimates.
Market experts suggest that with clear macro headwinds facing markets over the next few quarters, a narrowing market is becoming a reality, meaning fewer stocks are likely to perform well across segments. Rushabh Sheth emphasized that the impact of a weaker monsoon on water availability is a slower-burning risk, adding to the overall market concerns.
The broader market sentiment remains cautious, with analysts predicting that the current trend may continue unless there is a significant improvement in the global oil price situation and the monsoon forecast.
Oil is an immediate pressure point, while the impact of a weaker monsoon on water availability is a slower-burning risk.
Rushabh Sheth, Co-founder and co-CIO at Karma Capital
