Indian shares post weekly loss as Fed jitters, closing auction weigh

Indian equities saw a weekly decline on Friday, marking their third loss in a row, the longest such streak in five months. The nervousness was heightened due to a new closing-auction mechanism and expectations ahead of the Federal Reserve Chair’s remarks. On Friday, the Nifty 50 climbed 0.35% to 24,175.65 points, while the BSE Sensex gained 0.43% to 77,264.51.

The IT index surged 3.5%, buoyed by strong quarterly results from U.S. chipmaker Nvidia. For the week, however, the Nifty and Sensex fell 0.3% and 0.4%, respectively. Concerns over the new closing auction, responsible for determining the official closing prices of futures and options-eligible stocks, continued to weigh on the market.

The Nifty's indicative price tumbled from negative 0.24% to negative 1.4% on Tuesday, while the BSE derivatives turnover hit an 11-month low on Thursday, with its indicative close briefly plunging more than 3% during the closing auction. SEBI Chairman Tuhin Kanta Pandey affirmed that the regulator was not contemplating immediate changes to the mechanism despite market volatility.

Market analysts, such as Niharika Tripathi from wealth management platform Wealthy.in, highlighted that the MSCI rebalancing scheduled for August 31 could serve as a crucial test, as passive-fund flows might result in substantial order concentration. Of the 16 major sectors, ten experienced declines during the week. Billionaire Mukesh Ambani’s Reliance Industries shed 2.2%, while HDFC Bank fell 0.9% following a U.S. class-action lawsuit alleging illegal payments.

The lender maintained that the lawsuit was without merit and intended to vigorously defend itself. India’s broader small- and mid-cap stocks rose 0.5% each, driven by earnings, lower crude prices, and sustained domestic inflows. However, market experts cautioned that domestic markets remained rangebound due to crude-linked margin pressure, and valuation compression could occur if unexpected rate hikes—U.S. or domestic—surprise the markets.

Among stocks, Bharti Airtel saw a decline of 3.3% this week, as a major shareholder, Singtel, signaled intentions to adjust its stake alongside promoter Sunil Mittal’s holding, potentially increasing share supply and exerting downward pressure on the stock.