Stock market weekly recap: SENSEX, NIFTY plunge over 4% as FIIs take exit route

Indian Stock Markets Witness Relentless Correction

The Indian stock markets experienced a sharp decline this week, marking one of the worst performances in over two years. Both the NIFTY50 and SENSEX closed over 4.5% lower, their lowest closing since 2022.

Thank you for reading this post, don't forget to subscribe!

Major Factors Driving the Market Downturn

1. West Asia Conflict and China Factor

• Escalating tensions in West Asia (Israel-Lebanon conflict) and foreign institutional investor (FII) flight significantly impacted market sentiment.
• FII funds moved to cheaper Chinese and Hong Kong markets due to Chinese central bank stimulus measures.
• Strong Chinese company earnings and low stock valuations further attracted FII investment away from India.
• (Note: Chinese market experienced a 22% jump last week.)

2. Weak Domestic Data

Disappointing economic indicators, such as lower manufacturing PMI and infrastructure output data, dampened investor confidence.

Day-wise Market Performance

Monday: Significant selling pressure led to a 1.5% decline in both SENSEX and NIFTY. Auto, realty, and banking shares were most affected. Tuesday: Market volatility continued with energy stocks falling while IT and auto shares gained. Wednesday: Market remained under pressure, with both indices losing over 2% due to escalating West Asia conflict. Thursday: Sharp market decline as Iran launched missiles at Israel. SENSEX experienced its biggest single-day drop since June 4th, while NIFTY fell to a three-week low. Friday: Continued FII selling pushed indices lower for the fifth consecutive day.

Major Gainers and Losers This Week

NIFTY Gainers

JSW Steel (up 3.22%): Benefited from reports suggesting that Chinese stimulus measures would benefit steel makers.

NIFTY Losers

Reliance Industries (down 9%): Concerns over crude oil supply due to the West Asian conflict impacted its share price. Several other companies (Asian Paints, Bharat Petroleum, etc.) down over 7% each due to FII selling pressure.

FII Activity

FIIs turned net sellers this week, offloading equities worth ₹40,511.5 crore due to rising West Asian tensions and the attractive Chinese market. Domestic Institutional Investors (DIIs) were net buyers, purchasing equities worth over ₹33,000 crore.

Looking Ahead

The ongoing geopolitical situation and earnings season starting next week will likely continue to influence market sentiment and price movements.

Sources

Economic Times: https://m.economictimes.com/markets/stocks/news/market-live-updates-sensex-nifty-stocks-live-markets-today-trading-news-bse-nse-market-update-20-oct-2023/liveblog/95311151.cms Moneycontrol: https://www.moneycontrol.com/news/business/markets/market-roundup-market-extends-slide-on-friday-sensex-down-0-98-nifty-loses-9482171.html