Indian equities ended lower on Thursday, with sentiment hit by rising US Treasury yields and firm crude oil prices. The Nifty extended its decline through most of the session, before a late recovery helped the index claw back nearly 195 points from the intraday low.
Despite the pullback, the benchmark closed 0.88% lower. The decline marked the Nifty’s eighth consecutive weekly loss, its longest losing streak since 2001. The current selloff has now surpassed the seven-week decline recorded during the Covid-led market correction.
The Nifty Bank index ended at 54,450.75, down 0.33%. On a weekly basis, the index declined 2.03%, marking its sixth consecutive weekly fall. Among Nifty constituents, Infosys and HDFC Life were the top gainers, while Bajaj Auto and Maruti Suzuki were the biggest laggards.
Sectorally, the mood remained weak, with most indices ending lower. Nifty Auto and Nifty Metal led the declines, followed by FMCG, while Nifty IT relatively outperformed. The broader market also remained under pressure. The Nifty Midcap 100 declined 1.01%, while the Nifty Smallcap 100 fell 0.97%.
Going ahead, Indian equities could remain under pressure as elevated global bond yields, renewed strength in crude oil prices and heavy foreign selling continue to weigh on sentiment. The US 10-year Treasury yield has climbed past its 2007 peak to 5.3%, its highest level since April 2002, while the 30-year yield has risen to 5.6%.
With the Nifty’s earnings yield now below the return available on US government debt, a sustained recovery could remain difficult until global yields stabilise, crude prices ease and foreign outflows moderate. The RBI’s monetary policy decision and the GST Council meeting on the GST 2.0 process reforms on Wednesday, October 7, will be key domestic events to watch.
Globally, the US jobs report and the trajectory of Treasury yields are likely to remain important drivers for market sentiment. Investors will also turn their attention to the upcoming earnings season, with expectations that corporate results could provide a potential trigger for the market to break out of its current weakness.
Sudeep Shah of SBI Securities said the 22,250-22,220 zone, corresponding to Thursday’s low, could act as immediate support. A decisive break below this zone could trigger fresh selling pressure towards 22,130. On the upside, the 22,600-22,620 zone is likely to act as an immediate hurdle.
A sustained move above this level could trigger a pullback towards 22,750. However, the broader trend remains weak until sustained buying traction emerges. Rupak De of LKP Securities said sentiment remains weak as the Nifty closed below its 200-week moving average for the first time since the Covid crash.
He sees support at 22,200, below which the index could correct further towards 22,060. On the upside, 22,600 remains a key resistance level. According to De, the index is likely to remain in a sell-on-rise mode as long as it trades below 22,600. Hitesh Rathi of Angel One said the 22,200-22,000 band remains an immediate and crucial support zone for the Nifty.
On the upside, 22,550-22,600 is likely to act as the immediate hurdle, followed by stronger resistance in the 22,800-22,900 zone. Indian markets were closed on Friday, October 2, on account of Gandhi Jayanti.