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On Friday, the Nifty 50 index settled 0.59% lower at 19,428.30, while the S&P BSE Sensex ended down 0.56% at 65,322.65.
The Nifty 50 fell 0.45% this week, clocking 1.04% losses in the last two sessions after the Reserve Bank of India’s rate decision on Thursday.
Eleven of the 13 major sectoral indexes logged losses with the high-weightage financials losing 0.87%.
Financials led the losses in the previous session too after the RBI asked banks to set aside a larger part of incremental deposits under the cash reserve ratio (CRR) to mop up excess liquidity.
“August and September tend to be seasonally tight months on the liquidity front, led by festive season outgo and advance tax collections,” Nomura analysts wrote in a note.
“The added impact of this tightening could negatively impact wholesale finance institutions temporarily.”
Consumer stocks lost 0.73%, extending their decline from the previous session after the RBI flagged near-term inflation concerns and raised the retail inflation forecast for fiscal 2024.
Analysts expect the rates to remain higher for longer and anticipate a rate cut only in 2024. However, they advised investors to utilise the buy-the-dips strategy.
“I feel that (this) market has more legs up, but there may be a little bit of a pause or a consolidation, which is healthy in the long run,” said Atul Suri, chief executive of Marathon Trends PMS.
The pharma index shed 1.45%, dragged by the post-earnings slide in Biocon and Alkem Laboratories.
Meanwhile, HCLTech rose 3.28% and was the top Nifty 50 gainer after announcing a global strategic partnership with Verizon for managed network services.
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