The Indian stock market endured significant turbulence this week, with key equity benchmarks reporting historically steep declines. The NIFTY 50 index witnessed over a 3% drop, closing at 22,124.7, marking its worst losing streak since 1996 as it extended monthly losses for the fifth consecutive month.
Sectoral indices mirrored this trend, particularly within the Information Technology (IT) and real estate sectors, which plummeted by as much as 8%. The NIFTY IT index was particularly hard hit, falling by 8% as major players like L&T Technology Services and Mphasis reported severe losses amid investor apprehension over potential slowdowns in IT spending driven by U.S. economic conditions.
Despite the prevailing negativity, some stocks, like those of JSW Infrastructure and Shriram Finance, managed to defy the trend and emerge as notable gainers. JSW Infrastructure saw its shares rise by 6.9% this week, closing at Rs 254.75. Shriram Finance, another bright spot, surged by 6.28% to Rs 617.3 on the National Stock Exchange (NSE), illustrating resilience amid heavy losses elsewhere.
The global backdrop remains contentious, primarily due to U.S. President Donald Trump's recent tariffs. Trump's announcement of additional tariffs on China has sent shockwaves through stock markets across the globe, hammering down stock valuations everywhere. This week, fears of rising inflation coupled with potential slow growth led to net selling by foreign investors, who sold off equities worth Rs 22,011.38 crore, exacerbated by uncertainties surrounding the trade policies.
Among the notable losers, L&T Technology Services faced the most substantial blow, with shares down over 12% as investor fears about IT spending shifted sharply following the grim overseas economic outlook. Other companies contributing to the decline include Prestige Estates and Polycab India, which also reported staggering losses exceeding 10% this week.
Notably, the sentiment was not universally negative. Stocks such as AU Small Finance Bank and Bandhan Bank enjoyed mild rebounds, with Bandhan Bank increasing 3.44% to trade at Rs 141.19 this week, indicating pockets of strength even as most indices fell.
Overall, the market’s downturn was highlighted by the broader momentum of the BSE Sensex, which fell sharply by 2.80% or 2,112.96 points, closing at 73,198.1. All sectoral indices ended the week lower, with the NIFTY Media and Realty indices registering respective declines of 7% and 5.5%.
The combined market capitalization of BSE-listed companies has dropped nearly Rs 20 lakh crore, reflecting the staggering impact of growing trade tensions on investor confidence.
Despite the long-term impacts painting a concerning picture, domestic institutional investors (DIIs) showed some faith, purchasing equities worth Rs 22,252.17 crore during the same period, which might provide slight cushioning against the FII selling spree.
Market analysts suggest investors should tread carefully, as the increased tariff risks highlight fundamental economic uncertainties. The escalated trade war might deter investment, pushing firms to adopt conservative spending strategies, which could constrain growth prospects significantly as feared. Every indicator suggests the third consecutive week of declines may not be the end of the market’s challenges.
Conclusively, the confluence of rising trade war tensions and deteriorative economic indicators presents substantial headwinds for the Indian stock market. With periodic rebounds amid the declines, it raises questions of how long such fluctuations can continue without substantive changes to the macroeconomic environment and trade policies.