Indian benchmark equity indices recorded their sharpest weekly decline in four months, with the Sensex falling 2,091.68 points (2.68%) to close at 76,055.77 and Nifty dropping 566.85 points (2.33%) to end at 23,767.45. For the week, the Sensex plunged 2,091.68 points while the Nifty fell 566.85 points, their steepest fall since the week ended March 13, 2026. According to Vinod Nair, head of research at Geojit Investments, "Investor sentiment weakened as the escalation in the West Asia conflict pushed Brent crude above the $100 per barrel mark, reviving inflation and rate-hike concerns. The return of US tariff-related uncertainties and softer July PMI data further weighed on the outlook, leading to broad-based selling, with large-cap stocks underperforming." The recovery was aided by a fall in crude prices after three days of gains, providing some relief to market sentiment. The broader market showed weak performance, with market breadth remaining negative as 2,185 stocks declined and 1,999 advanced. For the week, the Sensex declined 2.68% and the Nifty 2.33%, their biggest weekly declines since March 13, 2026. The total market capitalisation of BSE-listed firms stood at ₹475.69 lakh crore, down ₹5.23 lakh crore for the week, with weekly market capitalisation falling by ₹5.2 trillion.
According to latest reports, losses were broad-based with the BSE Realty index falling 4.0% to emerge as the worst performer, followed by a 3% decline in the Bankex. Information technology and oil and gas stocks lost about 2% each, while defensive pockets offered limited support as the BSE FMCG index gained 0.5% and the auto index edged up just 0.1%. Private banks were among the biggest drags, as their high foreign ownership left them vulnerable to overseas selling, with elevated deposit costs, margin pressure and slowing credit growth weighing on valuations. Focused IT jumped 1.30%, IT gained 0.66%, PSU Bank rose 0.65%, MidSmall Private Banks Quality Tilt advanced 0.46%, Insurance increased 0.43% and FMCG rose 0.20%, providing some support amid the overall weakness. The recovery was supported by lingering concerns over elevated crude prices, escalating Middle East tensions and sustained foreign fund outflows continuing to weigh on investor sentiment. Food delivery stocks Eternal and Swiggy also declined after reports that Walmart-backed Flipkart is preparing to enter the online food delivery segment, raising concerns over heightened competition. Barring auto and FMCG, all sectoral indices ended the week in the red, with private banks being the worst performers at -4.32%, followed by realty, financial services, oil & gas and IT sectors.
Crude oil has emerged as the biggest near-term risk for the markets in India, which imports around 90% of its requirements. Brent breached $100 a barrel during the week and traded around $103 on Friday, up nearly 24% from its pre-war level of $73.90 on 27 February. In the futures market, Brent crude breached $100 a barrel on Thursday after attacks on two Saudi oil tankers in the Red Sea heightened concerns over supply disruptions. India remains particularly vulnerable to sustained crude price increases as it imports most of its oil requirements. Higher energy costs could increase inflation, widen the trade deficit, weaken the rupee and squeeze profit margins across industries. As per Harshal Dasani, business head at INVasset PMS, "Brent above $90 is a macroeconomic headwind for India, but the bigger concern for equities is earnings. Aviation, paints, chemicals, logistics and other energy-intensive sectors could face margin pressure, while exporters and upstream energy companies may provide only a partial offset." The recovery was supported by lingering concerns over elevated crude prices, escalating Middle East tensions and sustained foreign fund outflows continuing to weigh on investor sentiment.
India was among the weakest major equity markets globally during the week, with the Nifty falling 2.33%, outperforming only Vietnam that declined 5.51% and Japan that fell 3.89%. South Korea's Kospi fell 1.9%, while US equities declined 0.6% and France ended almost unchanged over the week. Several Asian and emerging markets bucked the trend, with China gaining 2.7%, Taiwan advancing 2.4%, Brazil rising 1.7% and Hong Kong climbing 1.6%. The rupee's depreciation to 96.96 against the dollar has added to investor concerns, as a weaker currency reduces dollar-denominated returns for overseas investors and can encourage global funds to shift towards cheaper or commodity-rich markets. According to Mayank Jain, market analyst at Share.Market by PhonePe, "Until the rupee stabilizes or global risk sentiment improves, foreign portfolio flows into Indian equities are likely to remain cautious." The NSE's India VIX, a gauge of market volatility, rose over 3% to around 13.9, indicating investors continued to hedge against near-term uncertainty.
Foreign portfolio investors sold shares worth about ₹6,500 crore during the last two trading sessions, offsetting inflows of ₹5,871 crore recorded during the previous three sessions. As a result, FPIs ended the week as net sellers, with outflows of ₹628.5 crore. During the week, investors' wealth eroded by ₹5.23 lakh crore, with the BSE's total market capitalisation falling to ₹475.69 lakh crore. The BSE Midcap and Smallcap indices declined 1.42% and 1.30% respectively, extending their losses for the second consecutive week. According to Ajit Mishra, SVP – research at Religare Broking, "Investor sentiment remained subdued as Brent crude prices surged above $100 per barrel following a fresh escalation in the Middle East, reviving concerns over inflation and its impact on the domestic economy. Renewed selling by foreign institutional investors and the depreciating local currency remain key concerns for investors." Looking ahead, market direction is likely to remain closely tied to movements in crude oil prices and evolving global monetary policy expectations, as noted by Vinod Nair from Geojit Investments.
