Market weekly wrap: Sensex, Nifty slide over 1%; FIIs offload equities worth ₹1,246 cr amid geopolitical concerns

Indian equity market continued its losing streak for the second straight week, with the benchmark indices BSE Sensex and NSE Nifty falling over 1% each as escalated geopolitical tensions, sustained foreign fund outflows, and lack of clarity on U.S.-China trade negotiations weighed on sentiment. The large- and mid-cap indices were worst hit, while the small-cap index showed some resilience and closed flat.

During the week ended June 13, the 30-share Sensex lost 1,070.39 points, or 1.3%, to settle at 81,118.60, while the Nifty50 declined 284.45 points, or 1.13%, to close at 24,718.60.

On the sectoral front, most NSE indices ended in red, barring IT, healthcare and oil & gas, with Realty (-3.7%), Consumer Durable (-2.2%), FMCG (-1.9%), Capital goods (-1.8%), Auto (-1.7%), Metal (-1.6%), and Power (-1.6%) emerging as top laggards. On the other hand, Nifty IT was the top performer with a 3.3% gain, followed by Pharma (1.2%), and oil and gas (0.3%).

Among individual stocks on the Nifty pack, Tech Mahindra (+5.5%), Wipro (+4.8%), and ONGC (+4.6%) were among the top gainers, while Eternal (-5.1%), Adani Ports (-4.4%) and Shriram Finance (-3.6%) were top laggards.

What fuelled sell-off in Indian equities?

The correction in the domestic market was primarily driven by renewed geopolitical risks in the Middle East. Reports of Israel’s retaliatory strike on Iran escalated tensions, triggering a broad-based risk-off sentiment globally. This geopolitical flare-up led to a surge in crude oil and gold prices, while equity markets across the globe witnessed sharp declines, said Ajit Mishra – SVP, Research, Religare Broking.

“On the domestic front, concerns over rising oil import costs and cautious global sentiment dampened investor confidence. Continued selling by foreign institutional investors (FIIs) further added to the pressure, as elevated U.S. bond yields and a stronger dollar prompted capital outflows. Even though domestic macro data, such as a further moderation in inflation, remained encouraging, the prevailing global uncertainty outweighed the optimism,” he said.

Indian equity markets witnessed heightened volatility this week, ultimately closing in the red, as early optimism, driven by progress in U.S.–China trade negotiations, was overshadowed by escalating geopolitical tensions after Israel launched a strike on Iran’s nuclear facilities, said Vinod Nair, Head of Research, Geojit Investments.

“This development sparked a global risk-off sentiment, leading to a rally in safe-haven assets such as gold and U.S. bonds. Oil prices surged past $76/barrel after months of consolidation, as fears of supply disruptions resurfaced,” he added.

FIIs continue their selling spree

Foreign institutional investors (FIIs) continued to be net sellers in Indian equities for the second consecutive week of June. In the week ended June 13, the FIIs sold equities worth ₹1,246 crore, while domestic institutional investors (DIIs) extended their buying streak with net buying of ₹18,637 crore.

During the week, FIIs emerged as net sellers in three out of five sessions, with the highest single-day withdrawal of ₹3,831 crore on June 12. The market saw modest foreign fund inflows on June 9 and 10, which capped losses.

Market outlook

Looking ahead, investors are expected to remain cautious amid premium valuations and geopolitical risks. All eyes are now on the upcoming U.S. Fed meeting, where interest rates are likely to remain unchanged. However, the Fed’s commentary and economic projections will be closely scrutinised for future policy cues, said Vinod Nair of Geojit Investments.

Ajit Mishra of Religare Broking believes that markets are likely to remain volatile amid ongoing geopolitical uncertainty and crucial central bank meetings. The U.S. Federal Reserve’s upcoming policy decision will be closely tracked, as market participants look for clarity on the timing and magnitude of potential rate cuts, especially in light of mixed economic signals. Domestically, the focus will remain on the progress of the monsoon, crude oil price trends, WPI inflation data, and FII activity, he said.

Technical Outlook

The Nifty has re-entered its consolidation range, and a decisive move beyond the 24,400–25,200 zone will be required to establish the next directional trend. In the event of a breakdown, the 24,000 level is expected to act as a crucial support, whereas a breakout above 25,200 could trigger a sustained rally toward the 25,600 mark, said analyst at Religare Broking.

Rupak De, Senior Technical Analyst at LKP Securities, said the Nifty slipped sharply, breaching the 21- exponential moving average (EMA) - a key short-term moving average. However, it found support near the recent consolidation lows, leading to a strong intraday recovery.

“Going forward, the recovery could gain traction if the Nifty sustains above the 24,700 level. On the upside, the index may move towards 25,000 in the short term. Conversely, a decisive fall below 24,700 could trigger renewed bearish bets in the market," he said.