)
Indian equities slid to near 14-month lows on Friday, with the benchmark indices retreating about two per cent and posting their steepest weekly loss in about four years, as caution ahead of key US jobs data spooked global markets.
At 4.5 per cent, the BSE Sensex’s weekly fall was the steepest since November 2011. On Friday, the 30-share Sensex lost 2.18 per cent, or 562 points, at 25,201. The 50-share Nifty slipped below the psychological level of 7,800 to close at 7,655 points, down 167 points, or 2.15 per cent.
Nervousness ahead of US payrolls data and its impact on the Federal Reserve’s decision to raise interest rates when it meets on September 16-17 kept investors on tenterhooks.
The Shanghai and Hong Kong stock markets remained closed on Friday to commemorate the 70th anniversary of the end of World War II; they are slated to reopen on Monday.
“Several long investors pared their positions on Friday because of the nervousness surrounding the US jobs data and uncertainty around how the Chinese markets would open on Monday. It seems there was some delivery-based selling, which exaggerated the impact of the fall on Friday,” said U R Bhat, managing director, Dalton Capital Advisors (India).
The global risk-off sentiment has seen sustained foreign outflows from the Indian market. Foreign institutional investors (FIIs) have sold shares worth about Rs 19,700 crore in the last 12 sessions, excluding Friday. On Friday, FIIs sold shares worth Rs 1,287 crore, while domestic institutional investors sold shares worth Rs 1,128 crore, provisional data showed.
In August, foreign investors pulled out a record Rs 17,000 crore from the Indian market.
“The weakness we are seeing in the Indian market is part of the overall global correction. Market conditions might continue to remain weak for some more time.
In the short term, the risk aversion will prevail over all our positive domestic macro,” said Vikas Khemani, president and head (wholesale capital markets), Edelweiss Securities.
On Friday, all Asian indices ended in the red, with Japan’s Nikkei 225 falling the most at 2.1 per cent. The Kospi and Straits Times lost about one per cent each. European indices FTSE 100, DAX and CAC 40 were all trading in the red.
Indian markets recorded 2,116 declines compared with 574 advances on Friday. Of thee Sensex 30 stocks, 28 ended in the red.
All the 12 BSE sectoral indices lost, with the real estate and power indices declining the most (about three per cent each).
It has been a turbulent week for Indian equities, with the market ending lower on four sessions. Weaker-than-expected data on growth in gross domestic product (GDP) for the quarter ended June, coupled with the slower pace of core sector and factory growth, has led to concern about a pick-up in the economy. GDP growth slowed to seven per cent in the three months ended June from 7.5 per cent in the previous quarter, according to data released by the government on Monday.
On Thursday, data on the services sector, as measured by the Nikkei Purchasing Managers’ Index, showed the sector expanded for a second month in August.
Experts said the government would have to push ahead with its reforms agenda to spur growth and ensure India withstood the global turbulence triggered by fear over a slowdown in China and an interest rate rise in the US.
Analysts have started downgrading the Indian markets due to delay in a recovery in corporate earnings. In the past few days, Macquarie, Barclays and Ambit have lowered their price targets for the Indian market, citing weak earnings growth.
The India VIX index, a measure of market volatility in the short term, surged 9.6 per cent to 26.42 on Friday.
