Mumbai, March 7 (NationPress) The domestic equity indices experienced a significant decline of almost 3 percent this week, reflecting a cautious sentiment amid increased volatility. The combination of ongoing foreign institutional investor (FII) outflows and rising geopolitical tensions in the Middle East has left investors feeling uneasy.

The leading indices, Sensex and Nifty, both fell by 2.9 percent. The Sensex concluded at 78,918.90, a drop from last Friday’s closing of 81,287.19 (February 27), while Nifty finished at 24,450.45, down from the previous week’s closing of 25,178.65.

During this period, FIIs were net sellers, withdrawing over Rs 23,000 crore from Indian markets as a part of a broader global risk aversion trend. However, robust domestic institutional flows provided some support against further declines.

In addition to geopolitical concerns, the surge in crude oil prices, with Brent nearing $86 per barrel, has contributed to market anxiety.

While the broader market underperformed compared to the main indices, the BSE Midcap and BSE Smallcap indices dropped by approximately 3 percent on a week-over-week basis.

Most sectors closed lower, with the exception of BSE Capital Goods. The hardest-hit sectors included BSE Realty, BSE Oil and Gas, BSE Bankex, BSE Auto, and BSE Consumer Durables, which fell by 4.9 percent, 4.8 percent, 4.6 percent, 3.9 percent, and 3.1 percent, respectively.

On a positive note, BSE Capital Goods managed a slight increase of 0.2 percent, while defense-related stocks emerged as notable gainers, rising nearly 3 percent as geopolitical tensions heightened interest in defense companies.

Vinit Bolinjkar, Head of Research at Ventura Securities, noted, "This week’s Indian equity market performance highlighted a significant structural shift, marked by a persistent struggle between global risk aversion and domestic resilience."

Bolinjkar emphasized that the continuous FII outflows indicate a broader risk-off approach by global investors, influenced by geopolitical uncertainties and climbing energy prices.

Despite this pressure, domestic institutional investors (DIIs) have provided a strong counterbalance, absorbing the selling pressure due to steady systematic investment plan (SIP) inflows, preventing a more severe downturn.

Bolinjkar pointed out that while the Nifty 50 has approached its 200-day moving average near the 24,450 level, the overall structural narrative remains intact thanks to strong domestic liquidity.

Geopolitical developments continue to drive volatility, with Indian equities closing lower as escalating tensions in the Middle East dampened investor risk appetite during the latest trading session.

Volatility surged, with the India VIX spiking over 11 percent from the previous close, reflecting a significant increase in risk-averse positioning among investors.

ag/na