Indian equities reversed course this week to snap a two-week winning streak. Intensifying inflation concerns from surging crude oil prices overshadowed encouraging second quarter (Q2) earnings, failing to stem the sell-off. Small caps suffered the steepest losses as investors weighed improving profits against demanding valuations and pressure on margins. Brent crude spot traded at $110 a barrel on Friday, adding to concern over corporate costs and earnings.
The Sensex lost 2.15% during the week, while the Nifty 50 declined 2.36%. On Friday, the Sensex fell 0.17% to 73,123.83, while the Nifty shed 0.39% to 22,600.00. The weakness extended well beyond the benchmarks, with all sectoral indices tracked ending lower. Capital goods, power and consumer stocks were among the hardest-hit.
The Nifty Smallcap 250 index slumped 7.1%, its steepest weekly decline since the week ended 16 February 2025, when it lost 9.6%. The Nifty Midcap 150 and Nifty 100 indices fell 5.3% and 2.8%, respectively.
Devender Singhal, senior fund manager at Kotak Mahindra AMC, linked the weakness to global selling, particularly in artificial intelligence (AI)-related stocks, which was also weighing on shares trading at high price-to-earnings multiples.
He said some declines were occurring on low volumes, while a succession of large initial public offerings (IPOs) had temporarily absorbed liquidity, potentially reducing support for falling share prices.