Market weekly wrap: SENSEX, NIFTY50 fall 2% for 5th straight week; Infosys, HCLTech top losers

The Indian stock market ended lower for the fifth consecutive week on September 11, weighed down by sharp declines in realty and IT stocks. The investors’ sentiment remained cautious amid elevated crude oil prices and ongoing geopolitical concerns.

Brent crude prices surged nearly 9% during the week to settle at $104.47 per barrel amid rising concerns over the West Asia conflict.

The crude oil prices rose after tensions between the US and Iran escalated. Iran threatened to retaliate against any new US attacks on its assets, raising concerns over potential supply disruptions. On Monday, Iran warned that energy infrastructure across the Gulf, including US oil and gas interests, was vulnerable. This followed tit-for-tat strikes over the weekend, with no signs of progress towards a diplomatic breakthrough.

Meanwhile, treasury yields moved higher as investors look ahead to more key economic data releases this week, including wholesale inflation data, as rising energy costs weigh on markets. Rising bond yields in the US could trigger a flight of money from emerging markets like India to safety of US government debt, analysts noted.

Back home, IT shares came under selling pressure throughout the week on rising expectations that American corporations would cut down on their discretionary spending after stronger than expected August payrolls data from the United States increased chances of a rate hike by the Federal Reserve at its FOMC meeting due later this month.

Analysts also highlighted that the US clients of Indian IT firms may cut technology budgets owing to a jump in the borrowing cost for them, so they may postpone their discretionary spending, reduce consulting spending, or renegotiate with IT companies on the contracts.

How the mid- and small-cap stocks performed this week

During the week, broader markets also ended in red, with the NIFTY Midcap 100 and NIFTY Smallcap 100 falling 1.4% and 0.9%, respectively.

IFCI shares came under intense selling pressure amid profit booking following their sharp recent run-up. The stock had rallied strongly on expectations around the NSE IPO, with its valuation and indirect exposure to the exchange drawing increased investor attention.

GE Vernova T&D India shares rallied after the company said it has emerged as the L1 bidder for a Power Grid Corporation of India project.

Sectoral watch this week

Among sectors, the NIFTY Realty and NIFTY IT indices emerged as the top laggards during the week, declining 6.5% and 5.8%, respectively. The NIFTY Metal (-2.4%), NIFTY Oil & Gas (-2.2%) and NIFTY PSU Bank (-1.9%) were the other top losing sectors of the week.

Realty stocks declined as investors remained concerned about expectations of a rate hike amid inflation concerns. The real estate gauge is considered rate-sensitive, with higher interest rates weighing on the sector.

On the other hand, NIFTY Pharma and NIFTY India Defence were among the few gainers, rising 0.2% each.

However, India VIX jumped 15% this week, indicating higher expected volatility in the stock market, reflecting increased investor uncertainty and caution.