Indian Stocks Fall 5 Days Straight: Oil Prices & FII Outflows Hit Market

Indian equities recorded their fifth consecutive session of losses on Friday, with both the Sensex and Nifty initially falling over 1% before recovering to close 0.4% lower. This downturn was primarily driven by crude oil prices exceeding $100 per barrel and continuous outflows from Foreign Institutional Investors (FIIs).

The Sensex concluded at 76,059.77, declining 332 points, while the Nifty 50 finished at 23,767, a drop of 102 points. Despite the initial sharp decline, broader markets, including the Nifty Midcap 50 index, showed a strong recovery to close in positive territory.

Key Market Figures

• Sensex: Closed at 76,059.77, down 332 points.
• Nifty 50: Finished at 23,767, a decline of 102 points.
• Crude Oil Prices: Exceeding $100 per barrel.
• US 10-year Yield: Reached a 52-week high.
• Pan-European STOXX 600: Gained 0.8%.

Vinod Nair, Head of Research at Geojit Investments, stated that market sentiment is expected to remain under pressure due to persistently high oil prices, which could negatively affect macroeconomic indicators and growth. He highlighted the US 10-year yield reaching a 52-week high.

This surge in US bond yields indicates concerns over several factors, including energy-driven inflation, a robust labor market, and a hawkish Federal Reserve. These elements collectively increase the likelihood of a September rate hike in the US.

Global Economic Headwinds

New tariffs imposed by Washington present a challenge for export-oriented economies, particularly technology-heavy markets. Higher rates hinder growth and prompt investors to diversify away from concentrated exposures, according to Nair. The Bank Nifty, however, performed better, supported by attractive valuations and a positive credit growth outlook.

In the US, the Nasdaq saw a decline on Friday due to a sell-off in chip stocks, fueled by investor worries about extensive spending on artificial intelligence ahead of major tech earnings. The S&P 500 remained largely unchanged as tech sector weakness counteracted broader market support from lower oil prices.

European markets closed higher, with the pan-European STOXX 600 gaining 0.8%, marking its second consecutive week of gains. This recovery was aided by a decrease in oil prices, offering some relief to equities, though caution prevailed as bond yields remained high amid inflation concerns.

Nifty’s Technical Downtrend

From a technical perspective, Rupak De, Senior Technical Analyst at LKP Securities, noted that the Nifty broke its consolidation on the daily chart on Thursday. Subsequent selling pushed the index to 23,600 on Friday, falling below the 50 EMA and signaling a new short-term downtrend.

Market participants globally are now keenly awaiting earnings reports from major tech companies, while the European Central Bank maintained its interest rates. However, markets continue to anticipate a high probability of a rate hike in September, even as economic data from Germany and France showed improvements.