Growth at Home, Chaos Abroad: Markets Feel the Strain

Strong GDP and institutional buying cushioned markets, but Middle East tensions kept indices lower.[EasyDNNnews:PaidContentStart]

The dominant story of the fortnight was the escalation in the global energy supply crisis, which kept crude prices elevated and weighed on risk sentiment. On September 10, Saudi Arabia shut down its East-West pipeline after it came under aerial attack. The pipeline, which carries roughly 5 million barrels per day of crude to the Red Sea coast, had been serving as a key bypass route for shipments unable to transit the Strait of Hormuz. A day later, the United Kingdom Maritime Trade Operations Centre reported another tanker fire near the Strait following a fresh attack. By September 11, Brent crude was trading around USD 104.61 per barrel, while WTI was near USD 100, keeping concerns over further supply disruptions firmly in focus.

Against this backdrop, Indian benchmark indices ended the fortnight lower. The BSE Sensex declined 3.21 per cent to 74,781.76, while the Nifty 50 fell 3.22 per cent to 23,398.10. Geopolitical uncertainty, elevated crude prices and foreign selling remained the key pressure points. Institutional flows, however, offered some support. FIIs recorded net sales of ₹7,407.13 crore over the fortnight, while DIIs bought equities worth ₹24,598.38 crore, more than three times the foreign outflow.

Weakness was also visible across most sectors. IT was the worst performer, falling 7.19 per cent, followed by Realty with a decline of 6.34 per cent. Auto lost 5.26 per cent, while Metal slipped 4.12 per cent as concerns over global growth and higher energy costs weighed on cyclical sectors. FMCG declined 3.33 per cent. Power and Healthcare held up relatively better, slipping just 0.22 per cent and 0.69 per cent, respectively. Bankex fell 1.44 per cent, while Oil & Gas declined 1.47 per cent despite the sharp rise in global crude prices.

Domestic macroeconomic data, meanwhile, remained supportive. India’s Q1 FY27 GDP data, released by MoSPI on August 31, showed real growth of 7.8 per cent year-on-year, ahead of the RBI’s 7 per cent forecast. Manufacturing expanded 9.2 per cent, while gross fixed capital formation grew 11.9 per cent, pointing to healthy investment activity. August GST collections also remained strong at ₹1,99,853 crore, up 14.8 per cent year-on-year.

Global monetary policy added another layer of uncertainty. US CPI data released on September 11 showed headline inflation at 3.4 per cent year-on-year, keeping the possibility of a Federal Reserve rate hike at the September FOMC meeting in focus. Going ahead, crude oil prices, the duration of the Saudi pipeline shutdown, the Federal Reserve’s September decision and the October RBI MPC meeting will remain the key triggers for Indian markets.

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