Staff Reporter
India’s equity markets snapped their six-day winning streak on Friday, raising fresh concerns about policy credibility and foreign investor confidence. The fall came despite recent government measures such as GST rationalisation and claims of a resilient domestic economy, suggesting that global cues and institutional flows continue to overshadow policy-driven optimism.
The Sensex dropped 693.86 points, or 0.85 per cent, to settle at 81,306.85, sliding from the previous close of 82,000.71. The index opened weak at 81,951.48 and hit an intra-day low of 81,291.77. The Nifty 50 also lost 213.65 points, or 0.85 per cent, to end at 24,870.10, reversing the gains accumulated over the past three days.
Investor Caution Overrides Domestic Announcements
Vinod Nair, Head of Research at Geojit Financial Services, observed that despite domestic policy efforts, markets turned defensive ahead of U.S. Fed Chair Jerome Powell’s Jackson Hole speech. “Liquidity cues from the Fed will dictate the trajectory. Any indication of prolonged high rates will intensify FII selling, which is already pressuring Indian markets,” he said.
He also flagged concerns over the U.S. using tariff pressures on India as a “strategic lever” linked to Russia, complicating the outlook for trade and investment flows.
Broad-Based Weakness
Selling pressure was broad and pronounced:
- Nifty Bank shed 606 points (1.09%), led by declines in HDFC Bank, Kotak Bank, SBI, and ICICI Bank.
- Nifty FMCG slumped 565.60 points as consumer demand worries resurfaced.
- Nifty IT slipped 283.05 points (0.79%) amid concerns over U.S. spending.
- Nifty Financial Services dropped 256 points (0.96%).
Market heavyweights including Asian Paints, Ultratech Cement, Tata Steel, ITC, TCS, and Tech Mahindra were among the top losers, dragging down indices further.
Rupee and FII Pressure Continue
The rupee closed weaker at 87.50 per dollar, down 25 paise, despite early support from GST rate cuts. Persistent foreign portfolio investor (FPI) selling has created downward pressure on both equities and currency, undermining the government’s narrative of market resilience.
Analysts note that FIIs have pulled back from India amid concerns over high valuations, policy uncertainty, and global bond yield attractiveness.
Policy Promises vs. Market Reality
While the government has projected a strong macroeconomic story ahead of next year’s general elections, Friday’s market action highlighted investor scepticism. Corporate earnings have been mixed, and consumption demand has shown uneven recovery. The heavy reliance on global liquidity trends and foreign capital inflows underscores the fragility of India’s market momentum.
Outlook
With the Fed’s policy stance set to be revealed at Jackson Hole, investors expect heightened volatility in the coming week. A hawkish tone could deepen selling pressure, while dovish cues may offer a temporary reprieve.
However, analysts warn that unless structural reforms, job creation, and domestic demand recovery pick up pace, markets may continue to remain vulnerable to global shocks despite government assurances.