Indian shares slipped in volatile trade on Friday and were on course for their worst week in over two years, hit by worries that rapid increases in policy rates targeted at taming inflation could derail economic recovery.
The NSE Nifty 50 index slid 0.51% to 15,282.45, as of 0446 GMT, while the S&P BSE Sensex fell 0.38% to 51,300.96, with both indexes touching over one-year lows in their sixth straight session of losses.
The blue-chip indexes are set for losses of over 5% in the week that saw the U.S. Federal Reserve hike interest rates by 75 basis points and the Swiss National Bank deliver its first rate hike in 15 years. If losses hold, the Nifty and Sensex could suffer their worst week since May 2020.
“Investors remain concerned that central banks’ commitment to bringing inflation down will seriously damage a fragile economic recovery,” said Prashanth Tapse, vice president (Research) at Mehta Equities.
Tapse added that crude prices above the Indian central bank’s assumptions for inflation projections and selling by foreign investors was creating uncertainty.
Foreign investors have withdrawn a net $3.64 billion out of Indian equities this month after selling a net $5.18 billion in May.
“The rising cost of capital will impact valuation multiples and have an adverse impact on economic growth and corporate earnings,” said Gaurav Dua, head of capital market strategy at Sharekhan.
The Nifty IT index and the Nifty Pharma index, which track some companies that are exposed to the U.S. market, were among the worst performing sub-indexes on Friday, falling up to 2.5% each. The Nifty IT index is set for a weekly drop of around 8%.
Shares of India’s largest company, Reliance Industries, climbed 1.9% after five days off losses, offering the biggest boost to the benchmark indexes.
Mild gains in metal stocks, on a rebound in metal prices, helped plug some losses in the market.