India’s BSE Sensex closed about 0.4% firmer at 77,264.5 on Friday, recovering some ground after two consecutive sessions of losses, supported by easing crude oil prices and a positive global outlook for the technology sector. However, India’s new closing-auction mechanism remained a source of concern after sharp swings on monthly derivatives expiry days. Meanwhile, investors cautiously awaited Fed Chair Kevin Warsh's first Jackson Hole keynote for clues on the US central bank's September policy outlook.
The main underlying factors
HDFC Bank was a major drag on the index, particularly on Thursday. Given its large Sensex weight, relatively small movements in the stock can materially affect the index. Reuters specifically identified HDFC Bank losses as a key reason Indian equities underperformed broader Asian markets.
Thursday saw unusually sharp intraday volatility during the first monthly expiry under the new Closing Auction Session mechanism. This amplified the market's late-session moves and contributed to the sharp Sensex decline.
Investors were cautious ahead of Federal Reserve Chair Kevin Warsh's Jackson Hole speech. His relatively hawkish stance increased expectations that U.S. rates could remain higher for longer, putting pressure on emerging-market equities.
IT stocks were the week's bright spot. The Nifty IT index gained roughly 3.5%, helped by strong Nvidia results and renewed optimism around AI-related technology spending. This was particularly visible in Friday's 331-point Sensex rebound.
There was selling pressure in several domestic-facing sectors, including FMCG and auto, adding to the broader weakness.
