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Equity markets ended with losses on Friday as investors engaged in profit booking after the benchmark Nifty 50 index hit fresh record highs. Losses in index heavyweights Reliance Industries (RIL), Larsen & Toubro (L&T), and HDFC Bank, amid a sharp sell-off by foreign portfolio investors (FPI), weighed on the market performance.
After climbing to 22,795, the Nifty ended at 22,476, down 172 points, or 0.76 per cent, over the previous day’s close. The index, however, managed to eke out weekly gain of 0.4 per cent.
The 30-share Sensex saw an intraday swing of 1,627 points (2.2 per cent). The index finished at 73,878, with a drop of 733 points, or 0.98 per cent. The combined market capitalisation on stocks listed in BSE fell by Rs 2.5 trillion to Rs 406 trillion. In the earlier session, it had finished at a lifetime high.
Experts said factors like the ongoing Lok Sabha elections, uncertain economic and rate outlook in the US, foreign portfolio investors (FPIs) selling, and anxiety around corporate earnings are stoking turbulence in the market. India VIX, a gauge measuring volatility, rose for the seventh consecutive session and ended at 14.6, after a gain of 8.7 per cent. Turn to Page 7 >
This was the index’s highest close in two months. On Friday, FPIs sold shares worth Rs 2,392 crore.
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“At historic highs, there is always some nervousness and people watching over their shoulders to see who is rushing through the door. They want to book profits at the earliest sign of trouble. We have simmering tensions in the Middle East and rising US inflation," said UR Bhat, co-founder of Alphaniti Fintech.
“The only relief the market got this week from the Fed was that there won't be any hike in the interest rate. If interest rates continue to be high in the US, the FPI interest in emerging markets will continue to be at risk,” said Bhat.
More than half of the decline in Sensex was contributed by RIL, L&T, and HDFC Bank.
"Moving forward, the ongoing results season will be detrimental for investors to align their portfolios. The market will also remain vigilant about the BoE policy and GDP data from the eurozone. We expect a degree of consolidation in the market due to expensive valuations and any election-led jitters," said Vinod Nair, head of research at Geojit Financial Services.
Bhat said the markets would be range-bound until some of the macro headwinds subside. “If the election results are as per market expectations, there will be some bounce back. And markets will probably correct a bit post results as there won't be any triggers left,” said Bhat.
The market breadth was weak, with 2,411 stocks declining and 1,421 advancing. Four-fifths of Sensex stocks declined. Bharti Airtel, which fell 2.25 per cent, and Maruti, which declined 2.4 per cent, were the other big drags on the Sensex.
Telecom stocks declined the most, and its sectoral index fell by 1.4 per cent.
