Stock indices see biggest weekly fall since Nov 26

Mumbai: India's benchmark indices weakened on Friday, logging their worst weekly decline in eight weeks, led by losses in financials and technology stocks amid concerns over inflation and the US Federal Reserve's policy tightening. These worries outweighed the positive factor of strong results from fast-moving consumer goods (FMCG) giant Hindustan Unilever.

The Sensex and Nifty posted a weekly loss of about 3.5% each after having fallen for the last four consecutive sessions. This is the biggest weekly loss since the week ended November 26.

Experts said corporate earnings for the three months ended December have also failed to provide any reason to cheer. Technology stocks have been the worst performers in the last four sessions of losses.

"In America, the prime market focus now is with the 10-year treasury bond yield this week breaking above the perceived 1.8% resistance level," said Christopher Wood, chief global equity strategist at Jefferies, in his latest weekly note to investors. "The Fed balance sheet, which should total $8.9 trillion by the end of March, has now become a prime focus for the markets."

The Sensex fell 427.44 points, or 0.72%, to 59,037.18 and the Nifty dropped 139.85 points, or 0.8%, to 17,617.15. The volatility index, which measure's market's perception of fear in the near term, jumped 6% to 18.9 on Friday. Bajaj Finserv, Tech Mahindra, Bharti Airtel, IndusInd Bank and Larsen & Toubro fell 2-5%. Other IT stocks and financials in the Sensex such as Wipro, State Bank of India, Infosys, Bajaj Finance and Axis Bank recorded losses of 1-2%.

Hindustan Unilever was the top gainer on the Sensex, ending 2.7% up followed by Maruti Suzuki India, which rose 2%.

Among sectors, the Nifty IT index lost 7% during the week, posting its biggest weekly decline since March 2020.

Globally, investors have turned cautious on concerns over faster interest rate hikes by the US central bank, rising US bond yields, higher inflation and crude oil prices. Higher yields and interest rate hikes tend to make risky assets such as emerging markets less attractive, leading to outflows from foreign investors.

From a technical standpoint, the Nifty may see some respite after four straight days of losses.

"Nifty has support near 17,500-17,600 and the market could bounce from these levels. If the Nifty sustains above 17,600 in the coming sessions, it is likely to bounce back to 18,100-18,200," said Nagaraj Shetti, technical research analyst at HDFC Securities.

The decline in the last four sessions is just a retracement of the uptrend in recent weeks, said Shetti.