Benchmark stock indices extended their longest weekly losing streak since August 2023, with both Sensex and Nifty facing sharp declines as foreign investors continued to pull back amid a flurry of weak earnings from T2. By the end of the week, the NSE Nifty 50 was down 2.7%, while the BSE Sensex was down 2.2%, marking the fourth consecutive week of losses for both indices.

Friday’s trading session amplified those losses, with Nifty50 is down by over 300 points and Sensex by almost 900 points as the indices fell below the 100-day EMA. At the closing bell, the Sensex was down 662.87 points at 79,402.29, while the NSE Nifty50 was down 189.55 points at 24,209.85.

The decline spurred selling activity among short-term traders and reinforced the bearish sentiment engulfing Dalal Street.

Santosh Meena, head of research at Swastika Investmart, attributes the slide primarily to aggressive selling by foreign institutional investors (FIIs), which have redirected capital to China, where stimulus efforts and attractive valuations have created a compelling alternative.

“The main driver is foreign institutional selling, driven by valuation concerns and the increased attractiveness of the Chinese market. Another major factor is disappointing earnings reports from Indian companies, especially in the consumer sector, which signal an economic slowdown, especially in urban consumption,” Meena said, adding that this slowdown is also affecting financial stocks.

“Furthermore, we are now seeing selling pressure from many HNIs and retail investors, who have not experienced a correction of this depth for some time,” he added.

Meanwhile, Vishnu Kant Upadhyay, AVP – Research and Advisory at Master Capital Services, warned of further price corrections, citing mounting technical challenges. “A breach of the 100-day EMA intensified selling, with several key indicators showing bearish divergence,” he said. He advised investors to remain cautious, especially in the mid-cap and small-cap sectors.

As the broader market indices, including small-cap and mid-cap stocks, suffered weekly losses of 6.5% and 5.8% respectively, Meena suggested that investors should use this decline to accumulate high-quality stocks with large capitalization, especially in the financial sector, where valuations. they seem more attractive.

Both Nifty and Sensex are heading for their worst monthly performances since the March 2020 Covid-19 crash, reflecting deepening investor concerns about valuation, economic outlook and potential knock-on effects of the upcoming October expiration.