Mumbai: Domestic equity benchmarks plummeted nearly 3 per cent this week on a cautious note amid heightened volatility, as persistent foreign fund outflows and escalating geopolitical tensions in the Middle East kept investors on edge.
The frontline indices saw a fall of 2.9 per cent each. Sensex closed at 78,918.90 against Friday’s close of 81,287.19 (February 27), while Nifty settled at 24,450.45 against the previous week’s 25,178.65 closing.
Meanwhile, foreign institutional investors (FIIs) remained net sellers during the week, pulling out over Rs 23,000 crore from Indian markets amid a broader global de-risking trend. However, strong domestic institutional flows helped cushion the downside.
Rising geopolitical tensions and a sharp uptick in crude oil prices, with Brent moving closer to $86 per barrel.
While broader markets underperformed the headline indices, with the BSE Midcap and BSE Smallcap indices declined about 3 per cent on a week-on-week basis.
Sectorally, most indices ended in negative territory, except BSE Capital Goods. The worst-performing sectors included BSE Realty, BSE Oil and Gas, BSE Bankex, BSE Auto, and BSE Consumer Durables, which declined by 4.9 per cent, 4.8 per cent, 4.6 per cent, 3.9 per cent and 3.1 per cent, respectively.
In contrast, BSE Capital Goods managed to close marginally higher with a gain of 0.2 per cent, while defence-related stocks also emerged as notable outperformers, advancing nearly 3 per cent as geopolitical tensions boosted investor interest in defence-linked companies.
“The Indian equity landscape this week underscored a profound structural shift, characterised by a relentless tug-of-war between global risk aversion and domestic resilience,” said Vinit Bolinjkar, Head of Research at Ventura Securities.
According to Bolinjkar, the sustained FII outflows reflect a broader risk-off strategy by global investors amid geopolitical uncertainties and rising energy prices.
Despite the pressure, domestic institutional investors (DIIs) have continued to provide a strong counterbalance. Supported by steady systematic investment plan (SIP) inflows, local institutions have absorbed much of the selling pressure, preventing a sharper decline in the market.
Bolijnkar noted that while the Nifty 50 has retreated toward its 200-day moving average near the 24,450 level, the broader structural narrative remains intact due to strong domestic liquidity support.
Meanwhile, geopolitical developments remained a key driver of volatility in the latest trading session. Indian equities ended the session on a bearish note as escalating tensions in the Middle East dampened risk appetite among investors.
Market volatility spiked during the session, with the India VIX jumping more than 11 per cent from the previous close, indicating a sharp rise in risk-averse positioning among investors.
(IANS)
