CHENNAI: Indian equity markets closed sharply lower on Friday, extending a recent period of weakness as investors turned cautious amid persistent selling pressure and wider global uncertainty. After a brief attempt at early gains, the benchmark Sensex ended the session significantly down, slipping close to 1 percent from the previous day’s levels. The BSE Sensex dropped by around 769 points to finish at roughly 81,558, while the NSE Nifty 50 also lost ground, ending below key psychological levels near 25,000. Market breadth was weak, with a large majority of stocks declining across the broader market, reflecting broad-based selling rather than a narrow retreat in just a few sectors.
The decline marked the continuation of a cautious trend seen through the week, with domestic investors reacting to renewed foreign fund outflows and a lack of sustained bullish triggers. Overseas investors have been net sellers of Indian equities this month, pulling money out of Indian markets and adding downward pressure on prices. This foreign institutional investor activity has contributed to a climate of heightened risk aversion, even as some domestic institutional investors have continued to provide support at lower levels. The overall market capitalisation of listed firms fell by a significant margin on the day as both large-cap heavyweights and select midcaps participated in the sell-off.
"The markets closed today on a cautious-to-negative note, reflecting sustained pressure from global uncertainty and domestic macro headwinds. Persistent concerns around global trade policies and protectionist signals continued to cloud investor confidence, particularly weighing on export-oriented sectors and index heavyweights. The financial space remained under stress amid lingering questions on near-term earnings visibility, margin sustainability, and selective asset-quality risks, keeping broader participation muted," said R Ponmudi, CEO at brokerage and wealth advisory Enrich Money.
Sector performance was uneven, but the trend was broadly negative. Financials, private banks, real estate, information technology and pharmaceutical stocks were among those that weighed on the indices, with several names ending the session in negative territory. Some defensive and commodity-linked stocks provided limited support and even posted modest gains, but these were not enough to stem the broader slide. Key heavyweight groups such as the Adani portfolio took notable losses after fresh regulatory and legal developments abroad unsettled investor confidence. News that foreign regulatory authorities were seeking to serve legal summons directly to company executives was cited by some market participants as a factor behind the pressure on these stocks, contributing to the broader downturn.
The intraday trading pattern on Friday showed initial attempts at a rebound driven by positive cues in some Asian markets, but those gains fizzled as selling resumed swiftly in the afternoon. Analysts pointed to a combination of profit-booking after earlier rallies, persistent foreign outflows and looming domestic policy events—especially the approach of the Union Budget—as reasons for the market’s inability to find firm footing. Some commentary noted that technical indicators were flashing caution signs, with key support levels being tested. The Nifty’s moves around the 25,000 mark were described by market technicians as a crucial test for short-term direction, with a failure to hold that level amplifying bearish sentiment.
"From a macro standpoint, elevated crude prices and continued currency stress kept inflation concerns alive and reinforced caution around fiscal and monetary stability. While selective buying emerged in defensives and domestically driven pockets, it lacked the depth and breadth to counter the overall weakness. With global cues still evolving and earnings clarity limited, market participants preferred a cautious positioning, awaiting stronger directional triggers before rebuilding risk exposure," Ponmudi added.
Currency markets added to the risk-off mood, with the Indian rupee weakening to fresh multi-month lows against the US dollar during the trading session. A weaker currency can add pressure on import-dependent sectors and heighten concerns over inflationary pressures, further complicating the market outlook. Against this backdrop, broader economic data released on the same day painted a mixed picture: while indicators showed some resilience in private sector activity and economic demand, those positives were overshadowed in the equity market by lingering uncertainties.
According to a senior analyst at foreign brokerage, the investor sentiment remains fragile as markets enter the final week ahead of the national budget presentation, a key event that historically has triggered increased volatility.
"While there are pockets of optimism around economic growth prospects and improving business activity, markets are clearly in a corrective phase, with caution among traders outweighing broader bullish impulses," he added.
The closing weakness on Friday however highlighted how quickly short-term optimism can reverse when external selling pressures and domestic uncertainties converge, leaving markets in a tentative position as they head into the next trading week.