Markets post biggest 1-day loss in nearly 3 months, Sensex ends below 60K

India’s benchmark indices slumped on Friday amid investor fears that the US macroeconomic data released this week and the upcoming inflation data would strengthen the case for the Federal Reserve to extend its aggressive monetary policy.

The Sensex declined 981 points, or 1.6 per cent, to end the session at 59,845, and the Nifty50 index shed 320 points, or 1.8 per cent, to settle at 17807, with the two indices posting their biggest one-day fall since September 26, 2022, in percentage terms. Foreign portfolio investors were net sellers of domestic stocks at Rs 707 crore, according to provisional data from the exchanges.

During the week, the Sensex fell 2.4 per cent and the Nifty 2.5 per cent, their worst weekly decline since June 17, 2022. On a month-to-date basis, the Sensex has dropped 5.1 per cent and the Nifty 5.07 per cent. Energy and realty stocks fell the most this month, at 9 per cent each. The rout in equities this month has erased Rs 16.4 trillion in market capitalisation from the BSE-listed companies.

The US’ gross domestic product growth for the quarter ended September rose to 3.2 per cent as against 2.9 per cent a year ago. The rise in jobless claims for the week ended December 17 was less than expected. Also, US households modestly increased spending in November as the pace of inflation eased, underscoring the resilience of the US economy. A section of the market is now expecting the Fed to hike rates up to 5.5 per cent.

“If you go back a week, the market was saying the Fed’s hawkish stance is wrong and interest rates have to come down next year. And that is how global markets were moving more positively. All the data that came last night indicated that the economy is not so bad, and how can the Fed take its foot off the pedal in terms of interest rates. We are going to continue to see market volatility because of data,” said Andrew Holland, CEO of Avendus Capital Alternate Strategies.

The re-emergence of Covid fears in India after a wave of infection in China added to the volatility. News reports suggested that as many as 248 million Chinese might have contracted the virus in the first three weeks of December.

“The Covid case count in China and concern about possible recession will continue to influence the global equity market in the near term,” said Shrikant Chouhan, head of equity research (retail) at Kotak Securities.

The market breadth was weak, with 3,181 stocks declining against 411 advances on the BSE. Barring Titan, all the Sensex stocks declined. Reliance Industries fell 2.9 per cent and contributed the most to the Sensex losses.