Fifth consecutive bearish week in Indian markets – the longest run in two years

The Indian stock market remained bearish for the fifth consecutive week, last week. This is the longest bearish run in two years. This bearish run has been marked by significant declines amid persistent global trade tensions and domestic uncertainties. Sentiments remained subdued driven mainly by heavy selling from Foreign Institutional Investors (FIIs), weak corporate earnings particularly in banking and IT, and concerns over India-US trade talks. BSE Sensex and the Nifty 50 both declined 1.1%. Mid and small-cap segments also suffered extended losses during the week. The BSE Mid-Cap index dropped 1.8% and the BSE Small-Cap index tumbled 2.5%.

Foreign institutional investors remained persistent net sellers offloading shares worth over Rs 12000cr during the week. DIIs continued to provide support through stong capital flows.

Sector-wise, FMCG (+2.9%) showed some resilience, while Realty (-5.7%), IT (-2.7), Capital Markets (-3.3), Pharma (-2.9%) and Oil & Gas (-2.3) sectors faced steep declines

Global movement – Solid earnings reports from major companies like Alphabet buoy markets

The U.S. stock market exhibited a mixed but generally positive performance amid significant trade developments and corporate earnings. The S&P 500 and Nasdaq Composite hit new record highs early in the week, fueled by optimism over a U.S.-European Union trade deal that reduced tariffs to 15%, improving trade outlook and investor sentiment. The Dow Jones Industrial Average also approached record levels but experienced minor fluctuations throughout the week. However, the market saw some volatility in the latter half, influenced by weak jobs data and growing concerns about economic momentum. Despite this, most major sectors except consumer staples ended the week higher, led by industrials and consumer discretionary stocks, reflecting resilience amid tariff uncertainties and solid earnings reports from major companies like Alphabet.

The Federal in its July monetary policy meeting, maintained its target policy rate at a range of 4.25% to 4.50%, as was widely expected. Notably, two Fed governors dissented, preferring to immediately lower rates by a quarter point. Fed Chair Jerome Powell noted that inflation remained above the Fed’s target and reiterated the central bank’s willingness to wait for data to determine monetary policy decisions

The worse-than-expected employment data along with new tariff announcements helped send U.S. Treasury yields across most maturities lower as expectations for a rate cut in September jumped, with the yield on the benchmark 10-year U.S. Treasury note falling nearly 0.16 percentage point on Friday to 4.22%. The Dow Jones shed 2.9% for the week, S&P 500 declined 2.4% and Nasdaq fell 2.2%.

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Source: HDFC Securities Prime Research