Indian shares post weekly loss as Fed jitters, closing auction weigh

Indian shares inched higher on Friday, but posted a third straight weekly loss, their longest falling streak in five months, on concerns over a new closing-auction mechanism and caution ahead of the Federal Reserve Chair’s speech.

On Friday, the Nifty 50 rose 0.35% to 24,175.65 points, while the BSE Sensex added 0.43% to 77,264.51. The IT index jumped 3.5%, supported by upbeat quarterly results from U.S. chipmaker Nvidia.

For the week, the Nifty and Sensex fell 0.3% and 0.4%, respectively.

India’s new closing auction session, which determines the official closing prices of futures and options-eligible stocks, remained in focus following sharp moves on monthly derivatives expiry days.

The Nifty’s indicative price dropped from negative 0.24% to negative 1.4% on Tuesday while on Thursday, BSE derivatives turnover hit an 11-month expiry day low with its indicative close briefly falling more than 3% during the closing auction.

SEBI Chairman Tuhin Kanta Pandey said on Thursday the regulator was not considering immediate changes to the mechanism despite concerns over the market swings.

The key market concern is whether the closing auction can absorb large institutional orders without creating excessive price dislocation or liquidity stress, said Niharika Tripathi, head of products and research at wealth management platform Wealthy.in.

“The MSCI rebalancing effective after markets close on August 31 would offer a key test, as passive-fund flows could lead to substantial order concentration,” Tripathi said.

Ten of 16 major sectors fell this week. Billionaire Mukesh Ambani’s Reliance Industries lost 2.2%.

HDFC Bank slid 0.9% after a U.S. class-action lawsuit alleged illegal payments. The lender said the lawsuit is without merit and it intends to vigorously defend itself.

India’s broader small- and mid-caps rose 0.5% each, supported by earnings, lower crude prices and sustained domestic inflows.

“Domestic markets are rangebound due to crude-linked margin pressure, while valuation compression is possible if risk factors, including U.S. or domestic rate hikes, surprise markets,” said Karan Aggarwal, co-founder and CIO at Ametra PMS.

Among stocks, Bharti Airtel fell 3.3% this week. A major shareholder, Singtel, signalled plans to adjust its stake alongside promoter Sunil Mittal’s holding in Airtel, potentially increasing share supply and pressuring the stock.