Indian equity benchmarks tumbled nearly two percent last week dragged by shares in metal, oil & gas and financial spaces. Broader markets also weakened, hurting investor sentiment. The Nifty Metal index tanked more than five percent, its worst weekly performance in a month.
Selling returned to Dalal Street as investors globally feared rising inflation in the world’s largest economy which could prompt the US central bank to taper its pandemic-era stimulus and hike key interest rates sooner than expected earlier.
The Nifty Midcap 100 and Smallcap 100 indices finished the week 2.1 percent and 1.3 percent lower respectively.
The indecisiveness in the markets can be attributed to profit booking, since the probability of there being a prominent fall in the equity market due to the tapering is low, said Yesha Shah, Head of Equity Research at Samco Securities.
“India has been one of the best performing emerging markets in this year and multiple international brokerages have also been citing that Indian equities are overvalued, leading to higher prudence among investors. This combined with better opportunities available in the primary markets and inflation worries appear to be the driving forces of hesitation in the secondary space,” she said.
Once the Fed starts to wind down its stimulus, investors need to be watchful considering short-term corrections can prevail as liquidity starts to dry up, Shah added.
Foreign institutional investors net purchased Indian equities worth Rs 18,745.2 crore ($2.5 billion) during the week. Earlier this month, they had net offloaded equities worth Rs 4,694.1 crore ($629.2 million).
Winners and losers
Among the sectors tracked by NSE, the metal space was the worst hit, with the index falling 5.3 percent for the week. The Nifty PSU Bank, Oil & Gas, Realty and Private Bank gauges fell 2.4-3.4 percent.
While most sectoral barometers ended lower, the Nifty Auto bucked the trend, up a modest 0.4 percent for the week. The Nifty Health was flat.
In the Nifty50 universe, as many as 34 scrips finished the week lower.
Tata Steel, Coal India, Shree Cements, Bajaj Auto and Bharat Petroleum were among the top laggards. Maruti Suzuki, Power Grid, Asian Paints, ITC and Tech Mahindra were among the top gainers.
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In the midcap and smallcap segments, Triveni Turbine, Manappuram, TeamLease, Shreyans and Arihant Found, seeing weekly losses of 14.2-22.3, were among the top losers. On the contrary, Suprajit Engineering, Tanla, Brightcom, Kotyark Industries and Manugraph, seeing weekly gains of 18.1-66.5 percent, were among the top performers.
Around 370 scrips on BSE 500 — the broadest gauge on the bourse — saw weekly cuts.