Indian stock markets have no love lost for Fridays, it seems. Consider this: Of the 11 Fridays since July 1, the Bombay Stock Exchange (BSE) benchmark, Sensex, ended in the red as many as nine times. Not just that, the drop was more than one per cent on six of those occasions. Today was no exception. Renewed concerns over US growth and euro zone debt woes dragged down the 30-stock index 1.74 per cent, or 299 points, to 16,866.97. All the sectoral indices on the BSE, except consumer durables, ended in negative territory. Among major sectoral losers, the BSE Metal index declined 3.16 per cent, while BSE Bankex fell 2.35 per cent.
At the National Stock Exchange (NSE), the 50-stock Nifty index gave up 1.82 per cent, or 93.80 points, to close at 5,059.45.
The trend of Indian markets ending weak on Fridays has intensified in the last three months, as most investors are playing it safe. Between January 1 and June 30, the Sensex had fallen on 16 of 25 Fridays.
“People tend to cut their positions on Fridays in such uncertain times,” said U R Bhat, managing director at Dalton Capital Advisors (India). “There is a lot of negative news flow and expectations of volatility in markets are high.” Most retail investors are shying away from the markets. Short-term traders, speculators and foreign institutional investors are also not taking any chances on the last trading day of a week.
“The underlying tone of the market has been negative and in the last few months, it has only worsened,” said Jagannadham Thunuguntla, head of research at SMC Global Securities. “A lot of people don’t want to carry existing positions to the next week or take any fresh positions on Fridays.”
In the recent past, many major global events have happened after the close of Indian markets on Fridays. For example, S&P’s downgrade of the US AAA credit rating on August 5 and US Federal Reserve chairman Ben Bernanke’s speech on August 26 came after the close of Indian markets on Friday.
Important economic indicators like US non-farm payroll data, which most market participants watch for the jobs scenario in the world’s largest economy, also come on the first Friday of every month. No wonder, the Sensex has ended in the red on the first Friday three out of four times in the last four months, ahead of the US jobs data.
