Indian stocks end in red on Diwali after eight years, break 7-day winning run

Indian stocks ended lower on Diwali, concluding an eight-year winning streak as investors took profits after a steep rally. Despite the end of the winning run, the benchmark indices rose 8-9% for the week, marking the first time in nine years that the benchmark indices closed in the red on Diwali. The BSE’s Sensex dropped 28.62 points to close at 80,999.40, while the National Stock Exchange’s Nifty 50 fell 0.2% to 24,986.40.

Sectoral indices showed mixed results, with pharmaceuticals and healthcare gaining up to 2%, while IT and financial services dragged the market down. Heavyweights like ICICI Bank and HDFC Bank ended in the red. The India VIX, a gauge of market uncertainty, rose 5% for the third consecutive session, indicating ongoing unease in the market.

Despite the loss, market experts remain optimistic, predicting moderate and selective returns in the upcoming Hindu new business year. The positive outlook is supported by factors such as low valuations, high earnings growth, and the potential check on US President Donald Trump's policies following the Democrats' win in the US mid-term elections.

The looming uncertainty of AI spending and profitability has led to a "anti-AI" play in India, with foreign investors returning to the market attracted by robust earnings growth and a stabilising currency.