Indian stocks fell for a fifth straight week on Friday as a widening war in West Asia sent crude oil prices soaring, stoking inflation concerns, while rising US bond yields raised expectations of interest rate hikes by central banks.
The benchmark Sensex fell 2.3% over the week, while the Nifty 50 declined 2.1%, marking their steepest weekly drop since 24 July. On Friday, Indian equities faced a sharp sell-off, dragging the Nifty 50 to a three-month low. The Sensex and Nifty recovered from their intraday lows but still ended 0.16% and 0.34% lower at 74,781.8 and 23,398.10, respectively.
Analysts said crude oil remained a major concern, as Brent held above $100 a barrel amid an escalation in the West Asia war.
“Brent crude exceeded $108/bbl in Asian trade, nearing $110, after escalating US-Iran tensions and attacks on Saudi energy infrastructure pushed the benchmark above $100 for the first time in weeks,” said Vinit Bolinjkar, head of research at Ventura.
The crude oil rally pushed the 10-year US Treasury yield to 4.95-4.97%, its highest level since October 2023 and close to the critical 5% threshold. This sets the stage for a potential rate hike at the 16 September US Fed meeting. "The move coincided with a hawkish repricing in US interest rates, with markets now pricing in a ~71% probability of a 25-basis-point Fed hike next week, up from 61% prior to the producer price index print,” he added.