The benchmark indexes closed lower to log their worst week in over a year on Friday, as the escalating US-Israeli war with Iran sent crude prices surging and soured global investor sentiment.
Brent crude rose to a 20-month high of $87.66 per barrel on Friday and is on course for a 20 per cent jump this week, the sharpest rise since March 2022 in the aftermath of Russia’s invasion of Ukraine. Higher oil prices are typically negative for India, the world’s third-largest crude importer.
Markets fear that a broader energy-supply shock could substantially increase inflationary pressures and strain current account and fiscal balance.
The Nifty 50 fell 1.27 per cent to 24450.45 on Friday, while the BSE Sensex dropped 1.37 per cent to 78918.9, with heavyweight financials leading the drag.
For the week, the Nifty and Sensex lost about 2.9 per cent each, marking their steepest weekly decline since February 28, 2025 and December 20, 2024, respectively.
The market is taking into account the near-term threat from oil prices, said Pankaj Pandey, head of retail research at ICICI Securities.
“However, we don’t yet see a macroeconomic impact from this as the broad expectation is that crude prices will not remain elevated for a long period.
Fifteen of 16 major sectors fell this week, while small-caps and mid-caps declined 2.5 per cent and 2.9 per cent, respectively.
Currency low
The rupee ended a tad lower on Friday and logged its worst weekly fall in over a month as the US-Israel war on Iran sparked a surge in oil prices, jolting global markets and sparking a dash for safe-haven assets.
The rupee hit a record low of 92.30 per dollar earlier in the week but recovered sharply on the back of market interventions by the Reserve Bank of India. The currency ended at 91.74 on Friday, down 0.8 per cent on the week.
Bankers said the central bank was active across spot, futures, forwards and non-deliverable forward markets, estimating it deployed about $12 billion to shield the rupee.
“India is the most exposed to the West Asia-driven export demand, with China following closely behind,” Deepali Bhargava, regional head of research for Asia-Pacific at ING, said in a note. Reuters