Benchmark indices on Friday logged their biggest decline in a month amid a sell-off in global equities ahead of a crucial US jobs report that could determine the quantum and speed of the US Federal Reserve’s interest rate cuts.
The S&P BSE Sensex ended the session at 81,184, a decline of 1,017 points, or 1.24 per cent. The National Stock Exchange Nifty 50 closed at 24,852, down 293 points, or 1.17 per cent. This was the biggest single-day fall for both indices since August 5.
The sharp fall also snapped their three-week winning streak. The Nifty 50 ended the week down 1.5 per cent, the worst since June 2.
Foreign portfolio investors (FPI) sold shares worth Rs 621 crore, while domestic institutions pumped in Rs 2,121 crore.
“Nifty extended its fall to a third consecutive session, tracking a weak trend in global markets and fresh foreign fund outflows. World shares held near three-week lows on Friday, and crude oil languished near this year’s lows, as caution prevailed ahead of the crucial US jobs data that could decide the size and speed of coming rate cuts in the world’s largest economy,” said Deepak Jasani, head of retail research, HDFC Securities.
The US August jobs report, a monthly release awaited by investors to get an understanding of the scale of the slowdown in the world’s largest economy, was set to release later on Friday.
However, a slew of recent US data points had already dampened sentiment and stoked concerns over the health of the world’s largest economy. The US manufacturing surveys, job openings, and private sector payrolls were all weaker than expected.
The reports have led to speculations that the Federal Reserve may cut the interest rate by 50 basis points (bps) in the September 18 meeting as opposed to earlier expectations of a 25 bps cut.
The slowdown expectations have led to weakness in most markets globally.
“Global markets are adopting a cautious stance ahead of the release of the US non-farm payroll data. Additionally, the continuous decline in oil prices to a 14-month low and weak job openings data are heightening fears of a slowdown in the US in the near term,” said Vinod Nair, head of research, Geojit Financial Services.
In India, the broader market indices registered a sharper decline as compared to the benchmark indices, with the Nifty Midcap 100 falling 1.59 per cent and Nifty Smallcap 100 ending 1.25 per cent lower. Amid the broad-based sell-off, the fear gauge India VIX surged nearly 6.5 per cent to 15.13.
All the sectoral indices ended in the red, led by the Nifty PSU Bank index, which fell 3.4 per cent. The index was dragged down by a 4.4 per cent decline in State Bank of India after the global brokerage firm Goldman Sachs downgraded the stock to ‘sell’. Bharat Petroleum, ICICI Bank, NTPC, and HCL Technologies were the other major losers in large-cap indices.
Only a few Sensex and Nifty stocks like Asian Paints, Bajaj Finance, and JSW Steel ended in the green.
Overall market breadth was negative, with 1,403 stocks advancing and 2,544 declining on the BSE.
First Published: Sep 06 2024 | 6:51 PM IST
