Indian stock markets ended one of their most punishing weeks in nearly two years on Friday, October 23, as a relentless rise in oil prices and escalating tensions in West Asia drove investors out of the riskiest corners of the market.
The Nifty Midcap 100 index fell 5.6% and the Nifty Smallcap 100 dropped 7.3% over the holiday-shortened week, their steepest weekly declines since February 2025, Business Standard reported. The benchmark indices held up better but still lost ground: the Nifty 50 fell 2.4% for the week and the Sensex 2%.
On Friday alone, the Sensex slipped 125.56 points, or 0.17%, to close at 73,123.83, while the Nifty 50 fell 87.65 points, or 0.39%, to 22,600. The broader market was hit far harder, with the Nifty Midcap 100 down 2.2% and the Nifty Smallcap 100 down 2.9% on the day. The Nifty Metal index fell 2.71% and the Nifty Realty index 2.38%, according to Kotak Neo.
A brutal breadth
The scale of the selling was visible in market breadth. On the National Stock Exchange, only 317 stocks rose on Friday while 2,368 fell, and half of all listed stocks lost more than 2.6%.
The total market value of listed companies fell by about ₹7 trillion on Friday and by ₹20.6 trillion over the week. Companies ranked 101 to 500 by market value, the midcap and smallcap segment, accounted for ₹8.9 trillion of the weekly loss.
Among Nifty 50 stocks, Eternal, Apollo Hospitals, ONGC, Asian Paints and TCS were the top gainers on Friday, while Shriram Finance, Adani Enterprises, JSW Steel, Jio Financial Services and Adani Ports were among the biggest losers.
Oil is the main culprit
The central driver of the sell-off was crude oil. Brent December futures traded at about $114.29 a barrel in the Indian afternoon and reached $115 by Friday evening, up from $109.9 a week earlier. By later in the evening, Brent was trading around $116, a more than five-month high, according to Business Standard.
Prices have been pushed higher by attacks on Saudi Arabia by Yemen's Houthi movement, Iranian claims of strikes on tankers in the Gulf and fears of wider disruption to supply through the Strait of Hormuz. Somil Mehta of Mirae Asset Sharekhan said Brent could reach $118 in the coming days.
"The primary pressure on domestic markets is stemming from rising crude oil prices and global macroeconomic factors," Mehta said, emphasising that the weakness reflected external forces rather than a deterioration in domestic fundamentals.
India imports nearly 90% of its crude oil needs, making it one of the most exposed major economies to oil price shocks. Higher crude raises inflation, widens the trade deficit, pressures the rupee and squeezes the profits of fuel retailers and other energy-intensive businesses.
Why smaller stocks fell hardest
Valuations explain much of the divergence between large and small companies. The Nifty Midcap 150 trades at about 27 times earnings and the Nifty Smallcap 250 at 34 times, compared with 19.4 times for the Nifty 50, according to Business Standard. When risk appetite fades, stocks with the richest valuations tend to fall furthest.
Smaller companies are also more vulnerable to higher input costs and tighter financial conditions, and their shares are less liquid, which can amplify price moves when investors rush to sell.
