Dalal Street ended lower for the fifth straight session on Friday as a mix of global and domestic headwinds kept investors on edge. Concerns over escalating tensions in the Middle East, crude oil prices soaring to $100 per barrel, FII selling and other cues weighed down market sentiment.BSE Sensex closed 331.62 points, or 0.43%, lower at 76,059.77, after plunging as much as 916.96 points during the day to 75,474.43. NSE Nifty also fell 102.15 points, or 0.43%, to settle at 23,767.45.Vinod Nair, head of research, Geojit Investments Limited said, “Market sentiment is likely to remain under pressure in the near term, as sustained oil prices in a higher range could begin to adversely impact key macroeconomic indicators and growth dynamics.”
What’s driving the sell-off?
1. Rising oil prices amid Middle East tensionsInvestors remained cautious as geopolitical tensions in the Middle East fuelled concerns over crude oil supplies. The US military carried out its 13th consecutive night of strikes against Iran on Thursday after Yemen’s Houthi rebels claimed they had attacked two Saudi oil tankers in the Red Sea, raising fears of wider disruption to global shipping and energy supplies.Although Brent crude eased 3.66% to $96.98 per barrel on Friday, it had crossed the $100-a-barrel mark in the previous session, keeping worries alive over inflation and economic growth.2. Renewed concerns over US trade tariffsFresh concerns over US trade tariffs also weighed on investor sentiment, as market participants assessed their potential impact on global trade and export-oriented sectors. India will face a 10% tariff on exports to the US under a new tariff regime announced by the Trump administration, after qualifying for the lower rate following recent policy changes. The US imposed fresh tariffs of 10% and 12.5% on imports from 60 economies, saying the move is intended to encourage trading partners to strengthen enforcement against goods produced using forced labour.“Washington’s new tariffs on imports added another headwind for export-driven economies, with technology-heavy markets having been hit the most as higher rates weigh on growth and investors are increasingly seeking to diversify their concentrated exposure to other emerging market opportunities,” Nair added.3. Foreign institutional investor (FII) sellingForeign fund outflows continued to pressure the market. According to exchange data, Foreign Institutional Investors (FIIs) sold equities worth Rs 2,999.23 crore on Thursday, extending the recent trend of overseas selling.Forex traders also cited FII outflows as one of the factors weighing down rupee, alongside higher crude oil prices and geopolitical tensions.4. Weak global market cuesWeakness across Asian markets reinforced the risk-off sentiment. South Korea’s KOSPI plunged 5.72%, while Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng also closed lower. US markets had ended in the red overnight, although European markets were trading higher during the day.“Indian equity markets extended their losing streak to a fifth consecutive session as investors remained cautious amid lingering geopolitical tensions in the Middle East and renewed concerns over US trade tariffs. Weakness across Asian markets reinforced the risk-off mood, prompting broad-based selling despite signs of easing pressure in energy markets,” said Ponmudi R, CEO of Enrich Money.5. Selling in heavyweight stocksSelling pressure in heavyweight counters added to the decline. Infosys fell after trimming the upper end of its annual revenue growth guidance, while weakness in HDFC Bank also weighed on the broader market.Among Sensex constituents, Eternal, Mahindra & Mahindra, Bajaj Finance, Bharti Airtel, Asian Paints and Infosys were among the biggest losers, while HCL Tech, ITC, Axis Bank and Tata Consultancy Services bucked the trend to end higher.Infosys declined around 1% after narrowing the upper end of its full-year revenue growth guidance to 1.5%-3%, citing continued macroeconomic uncertainty.Meanwhile, rupee managed to post gains, recovering 18 paise to close at 96.55 against the US dollar after reports of intervention by the Reserve Bank of India (RBI).“Rupee has been stable on Friday, trading around 96.55 to the dollar at 3.30 pm. There are reports of RBI intervention to prevent further depreciation of the rupee. Some PSU banks are also reported to have sold dollars to stabilise the rupee. If crude declines next week, it can further help the rupee to stabilise,” said V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
