Markets tumble 345 points as investors eye global cues; metals shine amid turbulence

Mumbai — Indian equities lost ground on Friday as risk-off sentiment across global bourses spilled into domestic trade. The Sensex closed 345 points lower at 85,412 and the Nifty 50 settled near 25,800 after oscillating within a 480-point band. While investors trimmed positions ahead of key U.S. macro data and the European Central Bank’s policy review, selective strength in metals prevented a steeper slide. For the week, both benchmarks ended marginally in the red, snapping a three-week winning streak that had lifted valuations to near-record territory.

Mixed global mood drags sentiment

Overnight weakness in Wall Street—where the Nasdaq fell 0.9% amid disappointing tech earnings—set the tone. Asian peers mirrored caution as the Japanese Nikkei and Hong Kong’s Hang Seng dropped over 1%, tracking a rebound in the U.S. dollar index and rising Treasury yields. Europe opened subdued as geopolitical tensions in West Asia resurfaced, nudging investors towards safe-haven trades such as gold and the greenback. Indian traders returned from the Dussehra break facing a confluence of global worries: softer PMI prints, hawkish Fed minutes and tepid Q3 tech results that dampened risk appetite.

Domestic cues also turned cautious after the Reserve Bank’s latest bulletin warned of “sticky” core inflation and a likely moderation in urban consumption growth. The commentary, while balanced, reinforced expectations that policy rates would remain higher for longer—an outlook that typically compresses equity valuations. “Markets are resetting expectations; liquidity is abundant but patience is thinning,” said Raghav Mehta, Chief Investment Officer at Veritas Capital.

Metals outperform as China hints at fresh stimulus

The sole bright spot came from the metals pack, where the Nifty Metal index gained 1.4%, buoyed by reports that Beijing would roll out an additional ¥500 billion infrastructure stimulus. Steel majors Tata Steel (+3.2%), JSW Steel (+2.8%) and Hindalco (+2.5%) saw heavy buying on expectations of improved Chinese demand and stabilising global prices of iron ore and aluminium. Commodity strategists noted that the dollar’s firming usually weighs on base metals, but targeted policy easing in China had changed the narrative. “For the first time in months we’re seeing follow-through buying in metals rather than short covering,” observed Meenakshi Arora, metals analyst at Prabhudas Lilladher.

Domestic demand cues have also brightened. The government’s push on railways, defence and renewables is expected to lift steel and copper consumption by 9–10% in FY26. Brokerages have turned overweight on the sector, calling it an “under-owned inflation hedge.”

Financials, IT, autos drag indices lower

Profit-taking hit large lenders and IT majors that had powered the October rally. HDFC Bank, ICICI Bank and Axis Bank fell 1–2%, tracking muted loan-growth data and rising concerns over unsecured retail credit. IT names such as Infosys and TCS slipped after weak global guidance from U.S. software peers. Auto stocks were mixed—Maruti gained on festive bookings while Mahindra & Mahindra and Tata Motors edged lower on inventory build-up fears. Pharma and FMCG indices remained flat as investors rotated toward defensive themes.

Overall market breadth was slightly negative: on the BSE, 1,826 shares advanced against 1,932 declines and 131 remained unchanged. Mid- and small-caps underperformed, shedding 0.6–0.8% amid concerns that retail flows could pause after a hefty rally since August.

Domestic institutional flows steady

Despite the sell-off, domestic institutional investors (DIIs) continued buying, absorbing foreign outflows. Provisional exchange data showed FIIs sold shares worth ₹1,240 crore on Friday while DIIs purchased ₹1,180 crore, reflecting a tug-of-war between global and local sentiment. “Retail SIP inflows remain above ₹20,000 crore per month, offering a cushion to volatility,” said Neha Joshi of Kotak Securities. “However, we are seeing rotation from mid-caps into large caps as valuation comfort tilts.”

Rupee and bond markets show resilience

The rupee ended flat at ₹83.24 per dollar after mild intervention by the RBI, which sold dollars to prevent volatility. Ten-year government bond yields inched up to 7.25% amid global rate jitters but remained anchored on expectations of subdued borrowing in the December quarter. Dealers said the central bank is likely to stay data-dependent and avoid premature policy easing until headline CPI drops towards 4.5%.

Currency traders view the current range of ₹83–83.40 as stable and do not foresee sharp depreciation unless global risk-off deepens. A strong services surplus and moderate crude prices near $85 per barrel continue to support India’s external position.

Corporate earnings: mixed scorecard so far

With two-thirds of the Nifty companies having reported, aggregate Q2 profit growth stands at around 9%, a touch below street estimates but markedly broader than in FY24. Banks, metals and energy lead gains while IT and consumer names lag. Margins have expanded in autos and cement thanks to lower input costs. Market strategists believe earnings momentum will re-accelerate from Q3 as festive demand filters through and commodity price volatility stabilises.

Foreign brokerages remain constructive on India as a medium-term story even if short-term valuations appear rich. Goldman Sachs this week retained its 12-month Nifty target of 27,200 implying 5% upside, calling India “a relative haven in an uncertain world.” Morgan Stanley expects earnings per share to grow 14% annually through FY27 if investment momentum sustains.

Sectoral heatmap

• Metals: Index up 1.4%; Tata Steel, JSW Steel, Hindalco lead gains on China stimulus buzz.
• IT: Down 0.8%; Infosys, TCS, Wipro under pressure after weak U.S. tech results.
• Banking & Finance: Down 0.9%; profit-taking and rising concern over retail loan delinquencies.
• Energy: Flat; ONGC and Reliance steady amid volatile crude prices.
• Autos: Mixed; Maruti up 1.5% on festive bookings while M&M and Tata Motors soften.
• FMCG: Little changed; rural recovery yet to gain momentum.

Broader market pulse

Small-cap volatility remained high as exchange surveillance measures to curb speculative excesses took effect. Analysts warned that the recent listing boom in micro-cap IPOs may not be sustainable given valuation froth. Still, new debt-free issuers in defence and engineering saw healthy subscription, indicating selective risk appetite for quality names.

Mutual fund flows continue to broaden the investor base: SEBI data show that over 5.2 crore SIP accounts are now active, signifying deepening financialisation of household savings. Retail participation in the F&O segment has also grown threefold since 2021, although regulators plan additional risk-disclosure norms for first-time derivatives traders.

Technical outlook: short-term correction within trend

Chartists view the current dip as a healthy pause after a persistent uptrend that took the Nifty to record highs. Momentum oscillators like RSI have cooled to near-neutral zones (around 51). Immediate support is placed at 25,500 and then 25,320; resistance is seen near 26,050 and 26,250. “Unless 25,200 is decisively broken, the structure remains bullish,” said Ajay Kedia of Kedia Advisory.

Volume profiles show institutional buying on dips, implying that long-term funds view every correction as an entry opportunity. However, short-term traders have tightened stop-losses given the headline noise from U.S. bond markets and Middle-East geopolitics.

Commodity & global cross-currents

Oil prices hovered around $85 a barrel after data showed rising U.S. inventories offsetting supply concerns. Gold climbed 0.5% to $2,412 per ounce as investors sought safety. Global funds rotated partly out of emerging-market equities into bonds, triggering modest outflows from India and Indonesia. Still, the relative stability of the rupee and the depth of local mutual fund flows kept India on the radar as a favoured destination for long-only allocations.

Voices from Dalal Street

Brokerages differed on the magnitude of the pullback but concurred that macro fundamentals remain solid. ICICI Direct urged investors to “buy quality on dips,” highlighting earnings visibility in banks and infrastructure. Motilal Oswal recommended staggered entry into metals and autos. Global asset managers like BlackRock continue to cite India’s “demographic dividend and digital infrastructure edge” as long-term anchors.

Retail investor forums were abuzz with contrasting sentiment—some fearing a repeat of 2022’s volatility, others calling this a “textbook buy-the-dip” setup. Technical traders flagged the importance of next week’s monthly F&O expiry as a sentiment barometer. “25,800 has become the battle line,” said an options dealer at a foreign bank. “If bulls hold it, we can rebound quickly.”

Macro context: India still a bright spot

Against the broader backdrop of sub-3% growth in developed markets, India’s 6.6% IMF forecast remains an outlier. Foreign portfolio allocations to Indian equities have grown 10% this calendar year, second only to Brazil among emerging markets. The government’s capex outlay, banking sector resilience and rising formalisation of the economy continue to attract long-term capital. Analysts believe short-term market jitters are a healthy correction within a secular uptrend.

“We are in a phase of consolidation, not capitulation,” summed up Suhas Naik of Axis Mutual Fund. “The macro tailwinds — fiscal discipline, digitisation, manufacturing push — remain intact. Investors just need to align expectations to earnings reality.”

Investor strategy: what to watch next week

1️⃣ U.S. GDP and core PCE data — any surprise may reprice global rates.
2️⃣ ECB