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The Indian stock market experienced a significant decline on Friday, with the Sensex and Nifty indices both falling by 1%. This downturn was primarily attributed to the escalating tensions in West Asia and concerns regarding outflows from foreign portfolio investors (FPIs). The 30-share Sensex plummeted by 808.65 points, closing at 81,688.45, while the broader Nifty slid by 235.5 points to end at 25,014.6. The market's volatility was evident throughout the day, with the Sensex experiencing a wide intraday swing, gaining 871.22 points and losing 964.22 points. Similarly, the Nifty climbed to a high of 234.95 points and fell by 283.3 points during the trading session.
The decline in the Indian stock market comes after a week of significant losses, with the Sensex plummeting by 3.09% and the Nifty tumbling by 4.45% in the week ending October 4. FPIs played a significant role in the downturn, selling off Rs 9,896.95 crore worth of domestic shares on Friday alone. This followed a trend of substantial FPI sell-offs in recent sessions, with over Rs 37,000 crore shares sold in the previous four trading days. Conversely, domestic institutional investors bought Rs 8,905.08 crore equities on Friday, but their purchases were not enough to offset the FPI sell-off.
Experts attributed the bearish sentiment in the market to the escalating conflict in the Middle East, prompting investors to adopt a sell-on-recovery strategy. The surge in crude prices, driven by the geopolitical tensions, further added to the market's anxieties. While the increase in production from OPEC+ might limit further price spikes in crude, concerns remain about higher inflation and its impact on the Indian economy. This could potentially delay the Reserve Bank of India's (RBI) plans to cut interest rates, further dampening investor sentiment. The sell-off on Friday was particularly noticeable in sectors like realty, auto, and FMCG, while IT stocks bucked the trend, benefiting from expected US rate cuts and their defensive nature.
Source: Market continues to decline on West Asia, FPI outflow concerns