Nifty Falls 3.1% as Indian Markets Suffer 8th Straight Weekly Decline

Indian equity markets extended their weekly losing streak to eight weeks on Thursday, marking their longest run of consecutive declines in 25 years and surpassing the seven-week slide recorded during the Covid-19 market crash in 2020.

The Nifty 50 fell 198.50 points, or 0.88%, to close at 22,421.95, while the BSE Sensex declined 570.67 points, or 0.79%, to finish at 71,909.70. Over the week, the Nifty lost 3.1% and the Sensex fell 2.7%.

All four trading sessions during the week ended lower. Indian markets will remain shut on Friday for Gandhi Jayanti.

The latest eight-week decline has dragged the Nifty down around 8.7% and the Sensex about 8.4%. The current losing run is the longest since 2001, when the Nifty posted a nine-week decline. It has also exceeded the seven-week fall seen during the 2020 Covid crash.

Thursday’s session added to the pressure as the Nifty slipped below 22,500 and moved closer to its 52-week low. The index touched an intraday low of around 22,217 before recovering some ground.

Foreign Selling, Bond Yields Pressure Equities

Continued selling by foreign investors remained a major concern for Indian equities. Foreign portfolio investors have been reducing their exposure to Indian stocks amid elevated US Treasury yields, a stronger dollar and concerns over emerging-market assets.

According to provisional exchange data cited by Pabitro Mukherjee, deputy vice president of research at Bajaj Broking, foreign institutional investors sold equities worth Rs 34,970 crore during the past week. Domestic institutional investors, meanwhile, bought shares worth Rs 33,460 crore.

The trend has remained similar through September. FIIs withdrew around Rs 44,010 crore from Indian equities during the month, while DIIs invested approximately Rs 76,030 crore. Provisional figures also showed FIIs remaining net sellers for a 15th consecutive month.

Rising global bond yields have added to the pressure. The US 10-year Treasury yield has climbed to multi-year highs, increasing the appeal of dollar-denominated fixed-income assets and weighing on emerging markets.

The rupee’s decline has further complicated the outlook. The Indian currency slipped beyond Rs 96 against the US dollar during the week, raising concerns about imported inflation and external finances.

Crude Oil Adds to Market Pressure

High crude oil prices have emerged as another headwind for Indian equities. Brent crude has been trading around the $100-a-barrel level amid continuing geopolitical tensions.

Higher oil prices are particularly significant for India because of its dependence on crude imports. A sustained increase in oil prices can raise the import bill, put additional pressure on the rupee and make inflation management more challenging.

The combination of expensive crude, a weaker rupee and elevated global bond yields has therefore kept investor sentiment under pressure.

Broad-Based Selling Across Sectors

The decline was widespread, with 15 of 16 major sectoral indices ending the week lower, according to Reuters. Auto and consumer durable stocks were among the major laggards, while midcap and smallcap shares also faced selling pressure.

The Nifty Auto index declined sharply amid concerns over demand and vehicle sales.

Information technology was the notable exception, with the Nifty IT index gaining around 0.5% for the week. The sector received some support from expectations that softer US inflation could influence the outlook for US monetary policy.

September Ends on a Weak Note

The extended losing streak capped a difficult month for Indian equities. The Nifty declined around 6.7% during the September derivatives series, its weakest monthly performance in 25 years, while foreign investors remained heavy sellers.

The Nifty has also fallen below its closely watched 200-week moving average near 22,600, making the 22,600-22,400 zone an important technical area for traders.

Domestic institutional buying has provided a counterbalance to foreign outflows and helped absorb some of the selling pressure. Despite the duration of the current decline, its magnitude remains smaller than previous major market downturns. The Nifty’s roughly 9% fall over eight weeks compares with declines of around 22% during the 2008 crisis and more than 33% during the 2020 Covid crash.

What Lies Ahead for Dalal Street?

Investors are likely to closely track crude oil prices, US Treasury yields, the rupee and foreign fund flows in the coming week. The corporate earnings season will also be watched for signs that improving company performance can offset pressure from global liquidity and macroeconomic risks.

Vinod Nair, head of research at Geojit Investments, said the Reserve Bank of India’s policy decision would be a key domestic trigger, particularly amid pressure on the rupee and concerns over imported inflation.

He also pointed to India’s PMI data, US payrolls, PMI figures and FOMC minutes as important indicators for the direction of global yields and market sentiment. With second-quarter earnings expected to be softer than the first quarter, he said investor sentiment could remain fragile.

Nair added that any meaningful de-escalation in West Asia could provide relief to markets. Until then, he suggested that investors focus on companies with visible earnings and strong balance sheets, while long-term investors could consider accumulating quality stocks gradually during periods of weakness.

Technical Outlook

Rupak De, senior technical analyst at LKP Securities, said the Nifty remained under pressure as rising US 10-year Treasury yields and elevated crude prices weighed on sentiment.

He noted that the index had closed below its 200-week moving average for the first time since the Covid crash.

According to De, 22,200 is an important support level, with a break below it potentially opening the way towards 22,060. On the upside, 22,600 remains a key resistance level. He said the near-term trend would remain weak while the index trades below that level.