Weekly wrap 15 to 19 April: A volatile week on D-Street amid Iran-Israel flare up

• SENSEX, NIFTY dropped up to 1.6% on a weekly basis as volatility prevailed in the broader market.
• ₹5.18 lakh crore eroded in Market capitalisation of BSE listed companies in a single session on Monday.
• Muted Q4 earnings expectations and weak quarterly results by IT companies could extend consolidation next week.

Hello there, we are back with a recap of yet another week in the stock markets that witnessed extreme volatility.

Stock markets saw turbulent times this holiday-trimmed week as tensions between Iran and Israel escalated. Frantic selling by investors dragged benchmark indices, SENSEX and NIFTY, up to 1.6% each this week.

Broader markets also weighed under the geopolitical worries, and investors lost around ₹7 lakh crore.

The escalating tensions in the Middle East and better-than-expected US economic numbers bolstered the dollar and US Treasury yields, which touched a high of 4.6%. Gold, a safe bet for many investors, also raced to all-time highs. This resulted in the flight of capital from riskier assets and emerging markets like India.

Diminishing hopes of a rate cut by the US Federal Reserve added to growing worries. Financial results by corporates were also a mixed bag offering little solace to investors from geopolitical tremors. Stock markets started this week on a feeble note, with SENSEX and NIFTY falling 1% in the second straight session of losses on Monday.

NIFTY closed at day's low levels of 22,272 as IT, financials and banking shares melted due to selling pressure.

Large, mid and small cap shares also came under selling pressure. Investors lost more than ₹5.18 lakh crore in a single day as market capitalisation of the BSE-listed companies declined to ₹392 lakh crore from nearly ₹397 lakh crore on Friday.

SENSEX and NIFTY continued to fall on Tuesday due to selling in IT stocks amid weak global trends. NIFTY dropped nearly 0.7% to close below the 22,200 level for the first time in over three weeks. The IT pack was most hit due to fears that weak discretionary spending in the US would hit their earnings. Muted domestic Q4 results also hit investor sentiment.

Profit booking took centre stage on Thursday as markets opened after a holiday break on Wednesday for Ram Navami. Banking and FMCG shares declined due to waning hopes of a rate cut by the US Fed as the US labour market remained resilient.

Reversing early gains, NIFTY and SENSEX shed almost 0.5%. Mid and small cap indices were also flat.

Stock markets opened to renewed tensions in the Middle East following Israel's missile attack on Iran, which Tehran vowed to reply to during the weekend. Asian markets also declined while US futures plunged, dragging Indian indices down up to 1% in the first half of trade. However, Iran indicating some restraint in retaliatory action and downplaying the incident gave some relief to investors in the second half.

SENSEX and NIFTY charted a remarkable recovery in the second half and closed with up to 0.8% gains.

SENSEX finally closed the week at 73,088.33 points, up by 0.83%, as banking, select auto and metal shares led the recovery.

Broader NIFTY closed above the 22,000 level at 22,147, up 0.69%. On a weekly basis, SENSEX tanked 1,156.57 points or 1.55% and NIFTY fell by 372.4 points or 1.65%.

Among sectoral indices, NIFTY IT fell the most by around 5% this week on weak spending concerns. Below-expectation Infosys' results also fueled selling in IT shares. NIFTY PSU Bank dropped around 4% while Private Bank, Realty and Healthcare indices declined 3%. Pharma index dropped 2%. 

Investors lost nearly ₹7 lakh crore in five days

Indian investors lost nearly more than ₹7 lakh crore in five straight sessions since Friday last week. SENSEX and NIFTY dropped around 4% in four sessions on Thursday. The total market valuation of BSE listed companies fell from ₹397.84 lakh crore on Friday to ₹393 lakh crore on Friday. Investors took a hit of ₹5.18 lakh crore on Monday and more than ₹1.37 lakh crore on Thursday.

The week ahead

Stock markets recovered from losses on Friday on expectations of the limited impact of the Iran-Israel conflict. Despite optimism, muted Q4 earnings expectations and weak quarterly results by IT companies could extend the consolidation. Investors will also look up GDP, PMI, and jobless claims data from the US next week for further insights into the Fed's policy. The investors will closely watch Indian PMI data and Q4 results.