India stocks log fifth weekly loss as oil fears grip markets

India’s equity benchmarks fell for a fifth consecutive week on Friday, as the escalating Middle East conflict pushed crude oil prices higher, raising concerns about inflation and global interest rates.

The Nifty 50 dropped 0.34% to 23,398.1 and the BSE Sensex lost 0.16% to 74,781.76. Both indexes fell over 2% this week and about 4.8% over the last five weeks.

The sell-off was broad-based, with fourteen of the 16 major sectors logging weekly losses. The broader small-caps and mid-caps also lost 0.9% and 1.4%. The Indian rupee weakened 1% too this week, marking its sharpest weekly drop since mid-May.

Brent crude futures have surged over 8% to $104 per barrel so far this week, as attacks on tankers in the Strait of Hormuz intensified and Iran-aligned Houthis threatened Saudi oil exports in the Red Sea as well.

“Such a sharp surge in Brent crude was not anticipated by the markets. Unless the Middle East crisis is resolved and Brent crude eases substantially, markets are in for a longer period of subdued performance,” said Ambareesh Baliga, independent market analyst based in Mumbai.

Rising oil prices inflamed inflation fears, sending global bond yields to multi-year highs. Higher bond yields typically reduce the appeal of risk assets such as equities for investors.

Heavyweight Financials lost 1.9% this week, with top private-sector lenders HDFC Bank and ICICI Bank dropping 0.5% and 3.1% respectively. HDFC Bank fell for a sixth week in a row as uncertainty over its CEO succession continued.

Reliance Industries, the third highest weighted stock on the benchmark Nifty 50, also lost 4.9% this week.

India’s IT index slumped 5.8% in its biggest weekly percentage drop since April. It was the biggest loser among major sub-sectors, weighed down by prospects of a Fed rate hike next week.

Investors await U.S. consumer inflation data later on Friday, seen as a key influence on next week’s Fed interest rate decision.