Markets fall nearly 2 pc as West Asia tensions, oil surge and IT sell-off weigh on sentiment

Indian equity markets declined nearly 2 per cent this week as West Asia tensions, a sharp rise in crude oil prices, and heavy IT selling weighed on sentiment, even as strong domestic institutional inflows helped limit deeper losses amid continued volatility.

Mumbai: The domestic equity markets closed on a weak note this week, with benchmark indices declining about 2 per cent amid escalating tensions in West Asia, a sharp spike in crude oil prices, and heavy selling in IT stocks weighing on sentiment.

On a weekly basis, headline indices Sensex and Nifty ended lower, falling 2.3 per cent and 1.9 per cent, respectively.

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However, broader markets showed relative resilience, with the BSE Midcap and BSE Smallcap indices slipping just 0.6 per cent and 0.2 per cent week-on-week.

On the liquidity front, foreign institutional investors (FIIs) remained net sellers, offloading equities worth Rs 1,369 crore during the week, while domestic institutional investors (DIIs) bought equities worth Rs 9,782 crore.

Sectorally, the IT pack emerged as the biggest laggard, plunging about 10 per cent on the BSE. The sell-off came after weaker-than-expected management guidance triggered fresh concerns over the FY27 earnings outlook, despite in-line quarterly earnings from Infosys and TCS.

In contrast, consumption-oriented sectors such as FMCG delivered a positive performance, with companies reporting double-digit volume growth. The BFSI segment has also posted steady results so far, with asset quality remaining stable despite concerns stemming from the West Asia crisis, particularly in MSME and commercial vehicle segments.

According to analysts, markets remained volatile with a cautious undertone during the week, as early recovery attempts fizzled out amid resurfacing US-Iran tensions and continued disruptions in the Strait of Hormuz.

They noted that elevated crude oil prices and stalled geopolitical negotiations kept investors on edge, limiting fresh buying and capping upside at higher levels, resulting in a range-bound market with a negative bias.

Analysts also highlighted that persistent FII outflows continued to weigh on sentiment, while strong domestic institutional inflows helped cushion the downside, indicating growing reliance on local liquidity.

Meanwhile, geopolitical developments remained a major overhang. After Iran announced the opening of the crucial Strait of Hormuz shipping lane, US naval forces intercepted an Iranian vessel, prompting renewed threats against Iranian infrastructure.

Iran subsequently re-imposed restrictions on the Strait of Hormuz, triggering a sharp spike in crude oil prices, which surged over 15 per cent during the week to $107 per barrel.

In a parallel development, US President Donald Trump reportedly extended the ceasefire arrangement with Iran indefinitely, adding to the uncertainty in the region.

Apart from geopolitical cues, investors also tracked the ongoing Q4FY26 earnings season for direction.

On Friday, the 30-share Sensex closed at 76,664, down 1,000 points or 1.28 per cent, while the 50-share Nifty settled 275 points, or 1.14 per cent lower, at 23,897.95.

For the coming week, key data points include India’s IIP data for March 2026, manufacturing PMI readings for April from the US, China and Japan, as well as US PCE inflation data.

Additionally, major central banks, including the Federal Reserve, Bank of England, and European Central Bank, are scheduled to announce their policy decisions.