Sensex ends 329 points lower, Nifty slips below 8,100

The benchmark indices on Friday settled the day lower as auto makers dropped on sharp decline in monthly sales and stocks of telecom service providers - Bharti Airtel, Idea Cellular, Reliance Communications (RCom) - were hit by worries about intensifying competition with the extension of freebies offered by Reliance Jio (RJio) till March 2017.

Sentiment was also muted ahead of the release of the US monthly jobs data, a referendum in Italy over its constitution, and the Reserve Bank of India's policy review next week.

The S&P BSE Sensex ended at 26,230, down 329 points, while the broader Nifty50 closed at 8,086, down 106 points.

Market breadth turned negative with 1,779 declines over 884 advances on the BSE. 128 stocks remained unchanged.

Meanwhile, the government in consultation with the RBI sharply raised the Market Stabilisation Scheme (MSS) ceiling to Rs 6 lakh crore from Rs 30,000 crore to mop up extra liquidity from the system in view of demonetisation. The central bank had also asked lenders last week to temporarily maintain an incremental cash reserve ratio (CRR) of 100%. 

"Since morning, the market had been reacting to rising global anxiety over today’s US employment data and the forthcoming Italian constitutional referendum on Sunday. While RBI’s market stabilisation scheme (MSS) to suck the excess liquidity in the system provided some short-lived relief to banks, the ongoing GST councils meet and the issues related to dual control and the roadmap to the implementation disrupted the investors’ mood," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.

Sectors and stocks

BSE Consumer Durables sector was the top loser and dropped over 2%, led by losses in Titan and Whirpool, down nearly 5% each.

Auto stocks fell after auto makers reported loss in monthly domestic sales in November as an intense cash crunch brought a recent recovery in consumer demand to a screeching halt.

Mahindra & Mahindra fell 1%, TVS Motor dropped 2.64%, and Tata Motors declined 3%.

Telecom companies continued to languish after Reliance Industries on Thursday extended an offer of free data and voice services by its telecoms unit, RJio, raising concerns about the cut-throat competition in the sector. Idea Cellular and Bharti Airtel declined upto 2% in intraday deals.

Banks fell on caution ahead of the RBI's policy decision next week. Nifty Bank lost 1%.

Paints companies were under pressure for the second straight trading session tracking the sharp rally in global crude oil prices.

Asian Paints, Berger Paints India, Shalimar Paints and Kansai Nerolac were down between 2% and 4% on the BSE. In past two trading sessions, Asian Paints and Shalimar Paints were down more than 6% each on the BSE.

US monthly jobs data

US payrolls data for November due later in the day is expected to come stronger amid growing confidence in the economy, making it almost certain that the Federal Reserve will raise interest rates later this month.

Nonfarm payrolls probably increased by 175,000 jobs last month after rising by 161,000 in October, according to a Reuters survey of economists. 

Italy referendum

Investors are also concerned about Italy's constitutional referendum on Sunday which would determine whether or not Prime Minister Matteo Renzi will continue to head the country. A ‘no’ vote has the potential to kick off market turmoil by sending the country’s bank shares crashing, pushing bond yields up and further weakening the euro. 

Global markets 

Italian shares rose to a three-week high, outshining weaker European markets, with banks in demand even as sentiment remained cautious ahead of a constitutional referendum in Italy and a presidential election in Austria this weekend.

The Pan-European STOXX 600 index fell 0.3%, while the Milan blue chip index rose % to its highest intraday level since November 10.

Asian markets tumbled on the possibility of faster-than-expected US interest rate increases that boosted 10-year US Treasury yields to an 18-month high overnight.

China’s Shanghai Composite lost 0.90%, Hong Kong’s Hang Seng index slipped 1.37%, while Japan’s Nikkei dipped 0.47%.