Sensex Snaps Winning Streak: RBI draft norms, oil prices knock equities lower
Key factors behind Friday’s fall:
- RBI’s draft norms for NBFC revolving credit products
- Sharp sell-off in banking and financial stocks
- Brent crude remained above $80 a barrel
- Persistent Middle East/Strait of Hormuz uncertainty
- Investor caution ahead of US non-farm payrolls data
- Continued FII selling in Indian equities
Mumbai: Benchmark equity indices ended lower on Friday, snapping a two-session winning streak, as heavy selling in banking and financial stocks, elevated crude oil prices and persistent geopolitical concerns outweighed positive corporate earnings.
The BSE Sensex fell 455.59 points, or 0.58%, to close at 78,499.17, while the NSE Nifty50 declined 65.35 points, or 0.27%, to settle at 24,570.65.
The sharpest losses came from financial stocks after the Reserve Bank of India released a draft framework proposing tighter norms for certain revolving credit products offered by non-banking financial companies (NBFCs). Investors feared the proposed regulations could moderate loan growth and impact profitability across the sector.
Bajaj Finance plunged 5.9%, emerging as the biggest loser on the Sensex, while Bajaj Finserv fell 4.18%. ICICI Bank and Axis Bank also ended lower, dragging the benchmark indices.
Market participants were also cautious as Brent crude hovered above the $80-a-barrel mark amid continuing uncertainty over developments in the Middle East, particularly around the Strait of Hormuz. Higher crude prices raise concerns over inflation and India’s import bill, tempering investor sentiment.
Analysts also pointed to caution ahead of the closely watched US non-farm payrolls data, which could influence expectations on the US Federal Reserve’s interest-rate trajectory and global capital flows.
Despite the weakness in financials, information technology stocks attracted buying on expectations of resilient global demand. Tata Consultancy Services and Tech Mahindra ended higher, while State Bank of India gained over 1% after reporting a healthy rise in June-quarter earnings.
Among sectoral indices, financial services, private banks, Bankex, housing finance and insurance ended lower. In contrast, IT, auto, PSU banks and healthcare closed with gains.
The BSE MidCap Select and SmallCap Select indices bucked the broader trend, ending marginally higher, indicating selective buying in the broader market.
Foreign institutional investors remained net sellers, offloading equities worth Rs 17.86 crore on Thursday, according to exchange data.
For the week, however, the benchmarks remained in positive territory. The Sensex gained 404.53 points, while the Nifty advanced 187.05 points, supported by earnings optimism and selective buying despite regulatory concerns and geopolitical uncertainties.