Sensex, Nifty post worst week in over 2 years as Mideast fears, foreign outflows weigh

The Indian equity benchmarks fell for a fifth session on Friday and posted their worst week in over two years as concerns about the deepening conflict in the Middle East continued to rattle investors, while rising foreign outflows also weighed.

The Nifty 50 index fell 0.93% to 25,014.6, while the S&P BSE Sensex shed 0.98% to 81,688.45, on the day.

The benchmarks lost about 4.5% each for the week, their worst since June 2022, with most of the decline due to a 2% slump on Thursday.

The escalating Middle East conflict rang alarm bells that crude supplies from the top oil-producing region may be disrupted. That has pushed crude prices higher, which hurts net importers such as India.

"Geopolitical landscape remains an active risk, with any further escalation potentially disrupting markets, leading to resurgence in inflation and prompting further correction," said Mahesh Patil, chief investment officer at Aditya Birla Sun Life Asset Management Company.

Analysts also attributed the drop in markets this week to aggressive foreign selling. Foreign outflows from Indian markets hit a record high on Thursday as investors directed inflows into China after its recent stimulus measures.

Barring metals led by JSW Steel on multiple brokerage upgrades, all the other major sectoral indexes logged weekly losses.

Realty, auto and energy were the top sectoral losers this week.

The broader, more domestically-focused small- and mid-caps fell 2.5% and 3.2% for the week.

Reliance Industries, the second-heaviest Nifty 50 stock, shed 9.2%, leading losses on the index this week.

On the day, Bajaj Finance fell about 3% and was among the top five losers on the Nifty 50. Jefferies said the non-bank lender's pre-earnings update showed a moderation in assets under management, with a 12% sequential drop in new loan bookings.

Mahindra and Mahindra Financial Services dropped about 6.6% after posting a decline in disbursements in the September quarter.