Indian equities remained under pressure last week as rising crude oil prices, elevated global bond yields, foreign fund outflows and concerns over tighter monetary policies affected market sentiment.
The Nifty 50 extended its losing streak to seven consecutive weeks, marking one of the longest periods of decline in recent years. Despite strong domestic liquidity support from mutual funds, benchmark indices struggled to recover as global uncertainties continued to weigh on investor confidence.
The benchmark Nifty 50 declined 1.64% in Thursday’s session, marking its biggest single-day fall in nearly 10 weeks. Although the index recovered some losses later, it failed to offset the weekly decline.
Key points:
Nifty ended the week lower by 0.88%.
The index recorded its seventh consecutive weekly decline.
This was the longest losing streak since 2020.
Over the last 25 years, Nifty has witnessed seven-week losing streaks only four times.
Apart from 2020, similar prolonged declines were recorded in 2008 and 2021. In 2021, the index witnessed one of its longest losing runs after falling for nine consecutive weeks.
Rising crude oil prices have emerged as a major concern for investors. Brent crude prices moved above $100 per barrel amid renewed geopolitical tensions in the Middle East.
Higher oil prices could impact India through:
Higher import costs.
Increased inflationary pressure.
Possible delays in interest rate cuts.
The rise in crude prices has also pushed global bond yields higher, increasing concerns that major central banks may continue with tighter monetary policies.
Elevated bond yields across major economies have reduced investor appetite for risk assets.
Market concerns include:
Higher US Treasury yields affecting global financial conditions.
Expectations of tighter monetary policies.
Pressure on growth-oriented sectors due to higher borrowing costs.
Market observers noted that crude oil prices remained elevated near recent highs, while higher US 10-year Treasury yields continued to keep pressure on global financial conditions.
Technology stocks witnessed renewed selling as higher global yields affected valuations of growth companies.
Factors impacting the sector include:
Higher interest rates reducing the attractiveness of future earnings.
Limited artificial intelligence exposure compared with global technology companies.
Investors shifting towards safer assets amid uncertainty.
Financial stocks were among the biggest contributors to the market decline last week.
Concerns over proposed insurance commission caps raised fears that earnings of insurance companies could face pressure.
The sector was already dealing with challenges due to:
Continued foreign investor selling.
Weak global market cues.
Rising crude oil prices.
Analysts expect volatility to remain high in the near term but believe selective opportunities could emerge as valuations become more attractive after the recent correction.
Market participants are closely monitoring global yields, crude oil prices and foreign fund flows.
Technical analysts suggest that:
The 23,300–23,350 zone remains an immediate resistance area for Nifty.
The broader resistance level is around 23,600.
The 23,000 mark remains an important near-term support level.
Despite continued weakness, stock-specific opportunities may emerge as investors focus on companies with stronger fundamentals and reasonable valuations.
While foreign investors have remained cautious, domestic institutional flows have helped limit the market decline.
The ability of benchmark indices to sustain above the psychologically important 23,000 level indicates resilience in the domestic market.
Market analysts believe that:
Elevated oil prices and global yields may continue to affect sentiment.
Improving valuations and steady domestic growth prospects could support selective buying.
Domestic liquidity could continue to provide stability during periods of global uncertainty.
The market direction will depend on several factors in the coming weeks:
Movement in crude oil prices.
Global interest rate expectations.
RBI’s policy decisions.
Foreign institutional investor activity.
Corporate earnings outlook.
With global uncertainties remaining high, volatility is likely to continue. However, improved valuations and strong domestic participation could provide support if external pressures ease.