The Indian stock market experienced significant losses due to sustained FII selling and concerns over a below-normal monsoon forecast, leading to worries about food inflation. Nifty dropped by 0.72% over the week and fell by 1.50% on the last trading day to close at 23,547, while Sensex declined by 1,092 points or 1.44% to 74,775, registering a 0.85% decrease for the week.
Large caps faced pressure, but midcaps briefly reached their all-time high, showing resilience in the broader market. Analysts noted that PSU Banks benefited from mark-to-market treasury gains, while autos and metals saw gains from a sharp decline in crude prices. On the other hand, FMCG, healthcare, and consumer durables declined as defensive premiums unwound due to an improved risk appetite.
Institutional selling was triggered in the last trading session due to MSCI index rebalancing-related adjustments. Market participants highlighted the need for policy clarity, normal monsoon conditions, and geopolitical de-escalation for a more positive market outlook in large caps.
Crude oil prices experienced a significant weekly decline driven by optimism surrounding potential US-Iran diplomatic progress, although below-normal monsoon forecasts by IMD offset some gains. The rupee strengthened modestly during the week following RBI’s comments indicating that the INR is undervalued.
Foreign institutional investors (FIIs) recorded cumulative outflows of around Rs 23,700 crore during the week. While benchmark indices showed divergence, with Nifty Midcap100 rising by 0.54% and Nifty Smallcap100 gaining 1.02% over the week.
Market participants anticipate Nifty 50 facing a strong resistance zone at 24,000–24,100 and a crucial support area at 23,300–23,000. In Bank Nifty, immediate resistance is seen around the 54,600–54,800 zone, with the 54,200–54,000 region acting as an immediate support zone.
Investors are closely monitoring cues from the upcoming RBI monetary policy decision, India’s GDP data release, Purchasing Managers’ Index (PMI), and the Index of Industrial Production (IIP) data.
