India’s benchmark indices saw sharp declines on Friday, driven by global market weakness and selling by foreign portfolio investors (FPIs).
The Sensex plummeted 1,017.23 points, or 1.24%, to close at 81,183.93, while the Nifty fell 292.90 points, or 1.16%, to finish at 24,852.20.
The sell-off was widespread, with the banking and energy sectors facing the most significant losses. The market breadth was negative, with 1,359 stocks advancing, 2,422 declining, and 86 remaining unchanged.
Major decliners on the Nifty included SBI, HCL Technologies, NTPC, ICICI Bank, and BPCL. Asian Paints, JSW Steel, Bajaj Finance, LTIMindtree, and Divis Labs were among the gainers.
All sectoral indices ended in the red, with auto, PSU banks, oil & gas, media, telecom, IT, realty, and capital goods sectors falling between 1% and 3%.
In the broader market, the BSE midcap index fell by 1.4%, and the smallcap index dropped by 1% after reaching a record high earlier in the day.
Ajit Mishra, SVP of Research at Religare Broking, said: “The recent weakness in U.S. markets has stalled momentum in Indian markets, causing participants to be cautious ahead of upcoming jobs data.”
Market expert Vijay Chopra said “A 2 to 3 percent correction is not unusual given that markets are trading at all-time highs. The recent selling pressure stems from reports that non-registered FPIs might be barred from operating in the market, which is creating additional stress. Markets are also sensitive to potential Fed rate cuts; a rate cut could trigger a strong rebound.”
Today’s deadline for foreign investors to disclose their beneficial owners, as mandated by SEBI, may have contributed to the selloff. SEBI’s new regulations aim to curb misuse of the FPI route by anonymous or “benami” investors, which has led non-compliant FPIs to offload their holdings.
Joseph Thomas, Head of Research at Emkay Wealth Management, said, “Domestic markets hit record highs earlier this week but have since corrected. Profit booking in overheated market segments may signal that future earnings reports will drive price movements.”
Globally, attention is focused on U.S. economic data, including payroll figures and potential Fed rate cuts. U.S. Federal Reserve Chair Jerome Powell recently suggested that it might be time to adjust interest rates as inflation aligns with the Fed’s targets. However, Powell did not specify the extent of any rate cuts. The Fed has kept the policy rate steady since July 2023.
Banking and market expert Ajay Bagga said, “Domestically, political risk is rising with upcoming state elections and a key ruling coalition partner engaging with opposition leaders.”
(With agencies input)
