Indian Stocks Experience Worst Weekly Decline in Six Years Amid Ongoing West Asia Conflict

Indian Equities Post Steepest Weekly Decline in Nearly Six Years

Market Overview Indian equities logged their steepest weekly decline in nearly six years, with benchmark indices dropping more than 5% during the week. The Sensex fell 1.93% to end the week at 74,563.92, while the Nifty 50 dropped 2.06% to 23,151.10.

Market Volatility Surges Market volatility surged as well, with the India VIX climbing from 19.88 to 22.66, signaling heightened nervousness among investors. This rise in volatility is a concern, as it may impact investor sentiment and lead to further market corrections.

Crude Oil Prices: A Key Trigger The surge in crude oil prices, with Brent crude briefly crossing $100 per barrel intraday on Friday, is a key trigger behind the correction. This has raised concerns about inflationary pressures and the potential impact on India's external balance.

Read also: SpaceX Seeks Record $75 Billion IPO, Potentially Positioning Elon Musk as the World's First Trillionaire

Impact on Earnings Growth Elevated oil prices are threatening to derail the Nifty 50's FY27 earnings growth projections of 16%. The oil price increase is also adding pressure on the rupee, which touched a record low of 92.457 against the US dollar.

Foreign Institutional Investor (FII) Outflows Foreign portfolio investors (FPIs) remained consistent sellers during the week, pulling out more than ₹24,000 crore from Indian equities.

Global Equities Decline Indian equities were not the only ones to decline, with global equities broadly falling as investors reassessed risks amid rising geopolitical tensions. The Nifty 50's fall of 5.3% was second only to Indonesia's Jakarta Composite, which fell 5.9%.

Sectoral Performance The auto index emerged as the worst performer during the week, falling more than 10%. The Bankex and metal index also declined, down 7% and over 6%, respectively. In contrast, the power sector bucked the broader trend, gaining about 0.7%.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Favoured Sectors Investors are increasingly favoring power and utilities stocks, drawn by the availability of defensive, high-quality names at relatively attractive valuations. The rapid expansion of data centres and AI infrastructure is expected to drive a sharp rise in electricity demand, strengthening the long-term outlook for companies such as Coal India, NTPC, NHPC, Torrent Power, and Tata Power.