D-St Slide: India’s equity indices fall for fourth consecutive week amid weak earnings

Mumbai: India’s equity indices fell nearly 1% on Friday, marking their fourth straight week of losses, as weaker earnings from index heavyweights and subdued sentiment across Asian markets weighed on investor confidence.

The NSE Nifty fell 0.9%, or 225.1 points, to finish at 24,837.00. The BSE Sensex moved 0.8%, or 721.08 points, lower to close at 81,463.09. Both indices declined 0.5% and 0.4%, respectively, over the past five trading sessions.

“The fall in the markets today was largely due to bearish earnings by heavyweights like Nestle and Bajaj Finance, which indicate a slowdown in the consumer economy,” said Pranay Aggarwal, director and CEO, Stoxkart. “There is also investor nervousness around the India-US trade deal.”

Bajaj Finance fell almost 5%.

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It emerged as the biggest loser on the benchmark Nifty on Friday. Shriram Finance and IndusInd Bank fell 3.6% and 2.6%, respectively.

The Nifty PSU Bank Index dropped 1.7%, while the Bank Nifty shed 0.9%. The Nifty Metal and Nifty IT indices fell 1.6% and 1.4%, respectively. The Nifty Auto Index ended 1.3% lower.

The Volatility Index, or VIX – the market’s fear gauge – gained 5.2% to 11.3 on Friday, indicating traders expect higher risk in the near term.

Elsewhere in Asia, Hong Kong fell 1.1% while Japan and China declined 0.9% and 0.3%, respectively. Taiwan ended marginally lower and South Korea rose 0.2%.

At home, the broader market bore the greater brunt of the weaker sentiment with the Nifty Mid-cap 150 and Small-cap 250 indices declining 1.6% and 2%, respectively, on Friday. Out of the 4,154 shares traded on the BSE, 1,061 advanced, while 2,969 declined. Over the past week, the mid-cap index shed 1.6%, while the small-cap index fell 3%.

Technical analysts said that stocks had run up significantly since April, and muted results by index heavyweights led to profit booking after the sharp rally.

“Overall, the market has been in a corrective phase in July – initially a time-wise correction that kept the markets in a tight range – but today the index decisively breached the key support level of 24,950, indicating that a price-wise correction is likely in the short term,” said Ruchit Jain, head of technical research at Motilal Oswal Financial Services. “The 24,650 level is the next key mark that offers a good buying opportunity.”

In the last three months, the benchmark Nifty has gained 3.3%, while the Nifty Mid-cap and Small-cap indices have surged 9.2% and 12%, respectively.

Foreign portfolio investors (FPIs) sold shares worth a net Rs 1,980 crore on Friday. Their domestic counterparts purchased shares worth Rs 2,138.6 crore. In July, overseas investors divested Rs 22,288 crore.

“The benchmark gained significantly between April and June, unlike in prior periods when July typically ended on a positive note,” said Jain. “This prior outperformance and the ongoing correction suggest that July is likely to close lower, despite being a seasonally strong month.”

Jain added that investors could consider buying on dips from a medium-term perspective, as these are corrections within a broader uptrend.

Aggarwal said the tariff on India is unlikely to be higher than that on China or Vietnam, and once the deal is finalised, the markets could rebound.

“Until further clarity emerges on the US-India trade deal, the markets are expected to remain sideways due to a lack of direction amid foreign selling,” said Aggarwal. “The markets are expected to end lower in July, and this sideways movement could persist into next month.”

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