Rs 14 Trillion Investor Wealth Wiped Out

Sensex and Nifty post steepest weekly loss in over a year, falling nearly 3 per cent.

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Domestic equity markets resumed their sharp decline on Friday as petroleum prices renewed their upward climb, with benchmark Brent crude breaching the $90 a barrel mark later in the evening for the first time in almost two years amid the ongoing war in West Asia.

The Sensex and the Nifty 50 logged their steepest weekly losses in over a year.

The Sensex fell 1.37 per cent, or 1,100 points, to close at 78,918, while the Nifty 50 declined 1.27 per cent, or 315 points, to settle at 24,450.

For the week, both indices dropped nearly 3 per cent — the Nifty 50’s worst weekly performance since February 2025 and the Sensex’s sharpest fall since December 2024.

Both indices ended at their lowest levels since April last year.

During the week, investors’ wealth in Indian equity markets declined by nearly Rs 14 trillion, including a Rs 3.2 trillion loss on Friday.

Foreign portfolio investors (FPIs) offloaded equities worth Rs 21,831 crore during the week and around Rs 6,000 crore on Friday alone.

Domestic institutional investors were net buyers in all four trading sessions this week.

Sensex, Nifty Log Steepest Weekly Loss in a Year

The selloff was triggered by a sharp spike in global crude prices after the US-Israel conflict with Iran intensified as it entered its seventh day, fuelling fears of a much broader disruption to global energy supplies.

World shares were mixed on Friday while US markets declined in early trade.

The price for a barrel of Brent crude jumped another 6 per cent to $90.60. During the week, it climbed around 25, the most since March 2022 following Russia’s invasion of Ukraine.

A barrel of West Texas Intermediate topped $85 for the first time since April 2024.

More oil tankers are diverting away from the Persian Gulf and toward the Red Sea, where Saudi Arabia is increasing crude loadings at the port of Yanbu.

The near-halt of traffic through the Strait of Hormuz is causing storage tanks across the region to top out, while drone and missile attacks have targeted refineries in Saudi Arabia, Kuwait and Bahrain, prompting several to cut capacity.

The escalating war has choked off gas supplies, too.

Higher oil prices are negative for India as they widen the trade deficit, stoke inflationary pressures and strain the country’s current account and fiscal balances.

Analysts warned that a sustained surge in crude prices could have significant macroeconomic implications for the country.

Rising Crude Threatens India’s Economy

Sonal Desai, chief investment officer at Franklin Templeton, said the ongoing crisis once again underscores the divide between oil exporters and oil importers, with the latter in a far more vulnerable position.

“Emerging market assets will likely feel the impact of a stronger dollar and potentially higher US interest rates against the backdrop of elevated oil prices,” she said, adding that risks to global growth will intensify the longer the conflict drags on.

A note by DSP MF said if crude rises above $120 a barrel and India continues importing at that level through FY27, the country’s oil trade deficit could climb to $220 billion, pushing the current account deficit above 3.1 per cent of GDP.

‘Deficits of this kind can lead to significant currency depreciation, heightened inflation and a liquidity crunch,’ the fund house said.

Most sectoral indices ended in the red, with the exception of IT and chemicals, which eked out marginal gains.

Market breadth remained weak, with 1,895 stocks advancing and 2,304 declining on the BSE.

ICICI Bank fell 3.4 per cent, while HDFC Bank, Axis Bank and State Bank of India dropped more than 2 per cent each.

Analysts said banks and financial stocks were under pressure on concerns that rising crude prices could push up borrowing costs and squeeze margins.

Shares of oil marketing companies also extended losses amid worries that higher crude prices could hurt marketing margins.

InterGlobe Aviation and Larsen & Toubro, which fell more than 2 per cent each, also extended their weekly losses.

Sanjeev Prasad, managing director and co-head of institutional equities at Kotak Institutional Equities, said the worsening geopolitical situation is adding to existing concerns for Indian equities.

“The steep escalation in the conflict between Iran and the US, concerns about a wider Middle East conflict and higher crude oil prices will further dampen investment sentiment for India,” he said.

“The market has already been grappling with high valuations and growing concerns around the potential AI threat to IT services exports and consumption.”

Feature Presentation: Ashish Narsale/Rediff