biznama.com
— Indian benchmark indices concluded the trading week on a negative note, with the Sensex and Nifty both falling close to one percent on Thursday. The selloff was driven by continued liquidations by foreign portfolio investors (FPIs) and significant declines in key index heavyweights, including HDFC Bank and Reliance Industries.
The market’s performance came as investors adopted a cautious stance ahead of a pivotal address by US Federal Reserve Chair Jerome Powell at the central bank’s annual summit in Jackson Hole, Wyoming. The Sensex closed at 81,307, down 694 points (0.85%), while the Nifty dropped 214 points (0.8%) to settle at 24,870, snapping a six-day winning streak.
Despite the day’s losses, both indices managed to post a weekly gain of approximately one percent. This was the second consecutive week of gains, following a six-week downturn largely attributed to foreign fund outflows. Market sentiment for the week was buoyed by positive developments, including an S&P Global sovereign rating upgrade for India and optimism surrounding the government’s proposed GST reforms.
Foreign funds have accelerated their withdrawal from the Indian equity market, with FPIs selling off a net ₹25,751 crore in August, adding to the ₹47,667 crore in outflows recorded in July. This selling pressure, however, has been absorbed by robust domestic institutional investment, with DIIs being net buyers to the tune of ₹66,184 crore in August and ₹60,939 crore in July.
The positive mood earlier in the week was largely tied to the government’s move on August 15 to simplify the GST framework into two primary tax slabs of 5% and 18%, with a 40% rate for “sin goods.” This overhaul, along with recent income tax cuts, is designed to stimulate consumption and mitigate the economic impact of a consumption slowdown and US tariffs, which currently stand at 50%. The reforms were announced shortly after S&P Global raised India’s long-term sovereign credit rating from BBB- to BBB, the first such upgrade in 18 years. The rating agency also simultaneously upgraded 10 financial institutions.
Sector-Wise Market Performance
While the broader markets faced a downturn on Friday, sector-specific performance provided a mixed picture. The fall was largely attributed to the heavyweights, but other sectors demonstrated resilience, contributing to the overall weekly gain.
Sectors Under Pressure The Financial Services and Energy sectors were the primary drag on the market on Friday. The losses were led by index giants like HDFC Bank and Reliance Industries, which have a heavy weighting on the Sensex and Nifty. The selling pressure in these sectors was a direct result of the sustained FPI selloff, as these funds often hold significant positions in large-cap stocks.
Resilient & Gaining Sectors In contrast, the Automobile and Consumer sectors were major gainers during the week. This positive momentum was fueled by two key factors:
- GST Reforms: The government’s proposal to simplify the GST structure into two main slabs (5% and 18%) is expected to reduce the cost of many consumer goods. This has led to strong investor optimism that it will boost demand, particularly for consumer durables and auto products, and has driven up their share prices.
- Sovereign Rating Upgrade: S&P Global’s decision to raise India’s long-term credit rating for the first time in 18 years created a positive sentiment wave, particularly for sectors like auto and consumer, which are seen as direct beneficiaries of a stronger economy and increased consumer spending.
