Indian markets decline for third week as interest rate uncertainty weighs

Indian equity benchmarks recorded losses for the third consecutive week as concerns over global interest rates, geopolitical uncertainty and volatility linked to the new Closing Auction Session weighed on investor sentiment.

The Nifty declined 0.31 per cent during the week, although it gained 0.35 per cent in the final session to close at 24,175. The Sensex ended Friday 330 points, or 0.43 per cent, higher at 77,264 but registered a weekly fall of 0.36 per cent.

Market analysts said uncertainty surrounding the introduction of the Closing Auction Session for futures and options stocks contributed to cautious trading. The monthly derivatives expiry saw sharp movements during the closing auction, raising concerns about short-term volatility and possible price distortions, particularly among heavyweight stocks.

The benchmarks recovered strongly on Friday, led by buying in information technology stocks following positive cues from global technology markets. However, the late week rebound was insufficient to erase losses accumulated during the previous sessions.

Remarks by the US Federal Reserve Chairman at the Jackson Hole symposium prompted investors to reassess the likely direction of interest rates and the possibility of a less accommodative monetary policy environment.

Uncertainty over US inflation and bond yields could continue to affect foreign institutional investment flows into emerging markets, analysts said.

Sectoral performance was mixed. The Nifty IT index gained around 2.45 per cent during the week, supported by renewed optimism around global technology companies and encouraging results from Nvidia. Select pharmaceutical and metal stocks also attracted buying interest.

Weakness in some banking and consumer stocks, however, continued to drag on the broader indices. Lower crude oil prices offered some relief to industries sensitive to energy costs.

Brent crude fell by more than 4 per cent during the week to around $88 a barrel as investors responded to expectations of improved shipping conditions through the Strait of Hormuz. Analysts cautioned that geopolitical risks remained elevated and any renewed disruption to energy supplies could quickly reverse the decline.

For the Nifty, the 24,000–23,800 range is expected to provide immediate support, while resistance is seen at 24,300–24,400. Bank Nifty has immediate support at 56,900–56,500, with the 57,800–58,000 range likely to act as a key resistance zone.

Investors will closely monitor domestic gross domestic product data and global economic releases for further direction. In the United States, employment data and the August non-farm payrolls report are due on 4 September.

With IANS inputs