Indian equities turned cautious on Friday, with the 30-share BSE Sensex falling more than 400 points while the NSE Nifty 50 traded above 25,100. HDFC Bank and Mahindra & Mahindra were among the biggest losers, with selling pressure in banking and automobile stocks weighing on the benchmark indices. The decline followed a strong run-up in domestic equities, with both benchmark indices having gained around 10 per cent in November, and investors appeared to be booking profits after the rally pushed stocks to elevated levels.

Rising crude oil prices emerged as a key concern, given India's dependence on imported energy. Higher oil prices can widen the country's import bill, pressure the rupee and add to inflationary pressures. Brent crude has been trading around $95 per barrel amid worries over disruptions to energy supplies after attacks on Saudi energy infrastructure and disruptions to shipping through the Strait of Hormuz. Inflation added to the unease, with India's retail inflation rising to 6.09 per cent in October, above the Reserve Bank of India's upper tolerance limit of 6 per cent, raising questions about the central bank's room to ease monetary policy.S2

Despite the weakness, foreign institutional investors remained net buyers of Indian equities. They purchased shares worth Rs 7,831 crore on Thursday, extending a buying streak to nine consecutive sessions. Their November inflows reached around $8 billion, the highest monthly inflow since December 2020, according to Reuters, providing some support to the domestic market.S2

Investors will track crude oil movements, foreign fund flows and global market cues for further direction. The Nifty's ability to hold above the 25,100 level will be important as the market works through profit booking after its recent rally.S2