Indian shares suffer biggest weekly decline in two years
Both indices touched more than 1-year lows in their sixth straight session of losses
MUMBAI: Indian shares ended lower on Friday to post their biggest weekly decline in more than two years, drubbed by worries that rapid increases in interest rates to tame stubborn inflation could derail economic growth.
The NSE Nifty 50 index fell 0.44% to 15,293.5, while the S&P BSE Sensex fell 0.26% to 51,360.42. Both the indexes touched more than one-year lows in their sixth straight session of losses.
The blue-chip indexes logged losses of around 5.5% each for a week that saw the US Federal Reserve hike interest rates by 75 basis points and the Swiss National Bank deliver its first rate hike in 15 years.
Analysts have said selling by foreign investors and fears of damage to economic recovery from aggressive monetary policy tightening were causing jitters in the market.
Foreign investors have withments,” drawn a net $3.64 billion from Indian equities this month after selling a net $ 5.18 billion in May. “The rising cost of capital will impact valuation multiples and have an adverse impact on economic growth and corporate earnings,” said Gaurav Dua, head of capital market strategy at Sharekhan.
The Nifty IT index and the Nifty Pharma index , which track some companies that are exposed to the US market, were among the worst performing sub-indexes on Friday, falling 1.5% and 2.2%, respectively. The Nifty IT index posted a weekly drop of around 8%.
Titan emerged as the top laggard among the Sensex constituents, skidding 6.06%, followed by Wipro, Dr Reddy’s, Asian Paints, Sun Pharma, L& T, UltraTech Cement, and PowerGrid. On the other hand, Bajaj Finance, Bajaj Finserv, ICICI Bank, Reliance Industries, ITC,
HDFC Bank, and Tata Steel were among the gainers, spurting up to 2.63%.
“With central banks’ policy tone pointing towards continued rate hikes of higher magnitude, we can expect FIIs to maintain their selling spree. The domestic market will continue to trade with high volatility in the near term. However, the ongoing corrections are opportunities in disguise for medium to long-term investsaid Vinod Nair, head of research at Geojit Financial Services.
On a weekly basis, the Sensex plunged 2,943.02 points or 5.42%, while the Nifty shed 908.30 points or 5.61%.
Over the last six sessions, equity investors have lost a whopping ₹ 18.17 lakh crore, with the market capitalisation of BSE-listed firms standing at ₹2,36,77,816.08.
“For the last few weeks, the capital market has witnessed substantial outflows. On the global front, the US Fed hiked the interest rates by 75 bps which was expected to somehow control the current scenario. The RBI has taken proactive measures by trying to balance the ongoing surge in inflation and growth. Considering the increase in capital expenditure and better credit growth for the banks, India’s economy is considered to be less risky as compared to other emerging markets in the long term. The foreign institutions surely have more faith and confidence in India’s growth story and the current exodus of cashflows will eventually slow down over the coming weeks,” said Manoj Purohit, partner and leader-financial services tax, BDO India.