Nifty 50 snaps longest weekly winning run since 2010 with 0.5% drop, 30 stocks end in the red

The longest weekly winning streak since 2010 came to an end this week as the Indian market faced significant selling pressure today. This downturn was influenced by a sell-off in global markets following fresh data from the US, which has reignited recession fears.

These concerns have resurfaced in the headlines for the first time since October 2022, adding to the market's volatility and uncertainty. Amid this backdrop, the Nifty 50 ended today's session with a drop of 1.7%, closing at 24,717 points, resulting in a weekly decline of 0.50%.

This marks the first weekly drop for the index after eight consecutive weeks of gains, with 30 stocks ending the week in the red.

Similarly, the Sensex ended its eight-week rally with a 0.43% decline, closing at 80,981 points. 20 constituents of the index have finished the week in the red. 

Both indices reached new peaks during Thursday's trading session, with the Nifty 50 crossing the 25,000 mark for the first time to hit a record high of 25,078 points, while the Sensex surpassed the 82,000 mark, reaching a fresh peak of 82,129 points, following clarity on the much-anticipated Fed rate cut.

However, these gains were erased in today's trade after fresh US data released on Thursday showed the ISM manufacturing index, a key indicator of factory activity came lower at 46.8%, signaling an economic contraction and falling short of expectations.

Additionally, initial jobless claims rose the most since August 2023. Disappointing earnings from major tech companies also dampened market sentiment.

These weak data releases came after the Federal Reserve decided to keep rates at a 23-year high of 5.25%–5.50% for the 8th consecutive meeting in July 2024, in line with expectations, with Fed Chair Jerome Powell hinting at a possible rate cut in September.

Commenting on today's market performance, Vinod Nair, Head of Research, Geojit Financial Services, said, "The domestic market saw a broad-based sell-off, indicating that it may have reached an exhaustion point due to a lack of new triggers for further upward movement. Q1 FY25 earnings have been lackluster so far, while broader market valuations remain significantly high."

"Meanwhile, despite the US Fed hinting at a rate cut in September, global markets are consolidating as this move has already been priced in. Additionally, weak earnings from the US IT sector, a potential rise in unemployment, the possibility of further rate hikes by the BOJ, and a slowdown in China's growth are all dampening market sentiment," he added. 

Weak July sales drag auto stocks

The Nifty Auto index tumbled 3% in today's trade after passenger vehicle manufacturers reported weaker wholesale figures for July amid slowing demand. Despite Tata Motors reporting higher-than-expected numbers for the June-ending quarter, the stock ended the session down 4%.

The management anticipates constrained production for Jaguar Land Rover (JLR) in Q2 and Q3 due to the annual summer plant shutdown and supply chain issues caused by floods at a key aluminum supplier.

Maruti Suzuki India ended the session with a 5% drop after reporting a 9.64% decline in domestic passenger vehicle sales, totaling 137,463 units compared to 152,126 units in the same month last year. While exports grew by 8% year-on-year and sales to OEMs (Toyota) more than doubled, total sales fell by 3.6% year-on-year.

For the first time in many months, Maruti Suzuki India's SUV segment experienced a decline of 9.3%, coupled with continued poor performance in the compact segment, which dropped by 12.3%.

Eicher Motors saw its stock drop by 5% in today's session after the company reported total motorcycle sales of 67,265 units in July 2024, an 8% decrease compared to the same period last year. In July 2023, the company had registered sales of 73,117 units.

Metal stocks continue to slide

Metal stocks faced significant losses today, with the Nifty Metal index dropping nearly 3% to 9,301 points. This marks the second consecutive decline for the index, resulting in a 1.16% loss for the week.

Since early June, metal stocks have been on a downward trend as prices of key industrial metals like copper, aluminum, steel, and zinc have steadily declined. Copper, often seen as an economic indicator, is currently trading at $9,030 per metric ton on the London Metal Exchange, down 18% from its peak in May due to weak demand from China, the world's top metal consumer.

Additionally, weak manufacturing data from the US has further exacerbated demand concerns.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.