Stories
Nifty's Longest Losing Streak: What Can Finally Steady Indian Stocks?
- •Indian stocks face pressure after Nifty 50 records its longest weekly losing streak in 25 years, falling 8.7% over eight weeks.
- •Foreign portfolio investor outflows, totaling a record $27.8 billion this year, are a major factor, exacerbated by higher US Treasury yields.
- •Crude oil prices, with Brent crossing $100, pose a significant risk to India's trade balance, rupee, and inflation, limiting monetary policy options.
- •The RBI's upcoming policy decision, with economists expecting a 25 basis point repo rate hike, will be crucial for market direction.
- •Strong domestic demand and the festive season could provide a cushion against global volatility and weak foreign flows, supporting earnings expectations.
Key Questions Answered
The eight-week losing streak was driven by persistent foreign portfolio selling, with outflows reaching a record $27.8 billion, as well as global financial conditions like rising US Treasury yields that offer higher returns elsewhere and weigh heavily on Indian equities.
The US 10-year Treasury yield reached 5.34 percent (its highest level since 2002), which strengthened the dollar and raised emerging-market opportunity costs. Meanwhile, Brent crude remained above $102 a barrel due to geopolitical concerns, threatening India's trade balance, weakening the rupee, and adding inflationary pressures.
A Reuters poll indicated that economists expected the RBI's Monetary Policy Committee to raise the repo rate by 25 basis points to 5.50 percent during its October 5 to 7 meeting, marking the first rate hike since February 2023 amidst rising inflation and a weakening rupee.
