The Sensex index ended positive Friday in a volatile session that has fluctuated between gains and losses ahead of key US jobs data, even as global equities poised for their third consecutive week of losses.
As Indian stocks struggled to give direction on Friday, the 30-share BSE Sensex index gained 36.74 points to finish at 58,803.33 and the broader NSE Nifty-50 index fell 3.35 points to 17,539.45.
“The market has struggled today to set a clear direction as global markets have been largely under selling pressure ahead of the release of US jobs data, which could provide insight into upcoming Fed actions,” said Vinod Nair, research chief at Geojit Financial Services, to PTI. .
Among the winners of the Sensex package were ITC, HDFC, Larsen & Toubro, Axis Bank, HDFC Bank, NTPC, Kotak Mahindra Bank and State Bank of India.
Maruti, Reliance Industries, IndusInd Bank, UltraTech Cement, Nestle and Tata Steel were among those lagging behind.
That comes after stock benchmarks crashed more than 1 percent to start weak in September, a month that often hurts global stock returns, and reversed two straight months of bull run.
“Markets are technically in overbought territory. China-Taiwan headlines will keep markets under pressure and US job data will be crucial to watch out for. Overall, markets are under selling pressure,” said Prashanth Tapse, Senior Vice President for Research at Mehta Shares.
Despite a volatile week, the influx of foreign investors into the domestic market continued. This week saw an inflow of $776.86 million from Thursday, while $534.34 million was pumped into the previous session.
A sharp recovery in Indian stocks this quarter has just seen their weighting rise to second in the MSCI Emerging Markets Index, behind only China’s.
But globally, after Fed officials made it clear that they have recognized the need for restrictive monetary conditions for some time, an indicator of global equities is poised for its worst week since June. This is due to declining bets on a moderate tightening by the Fed.
Global markets were on track to lose 3 percent over the week and the dollar hit its second day high against the yen against the yen on Friday for its second day ahead of key US jobs data as investors brace themselves for aggressive rate hikes by the Federal Reserve.
Concerns about global growth are exacerbated by the recent lockdowns in China and European markets are being hit by high energy prices caused by the conflict in Ukraine.
“The market is very focused on how aggressive the Fed will be with its walking cycle,” Giles Coghlan, chief currency analyst at HYCM, told Reuters, noting that expectations for higher interest rates have solidified since a speech by Fed Chairman Jerome last week. Powell at the Jackson Hole central bank conference.
Markets are concerned about “China’s slowdown, the eurozone recession and an aggressive Fed,” he added.
Recession fears are mounting in Europe as a survey published Thursday found that manufacturing output in the eurozone fell again last month as consumers rein in spending amid the stress brought on by rising costs of livelihood.
But thanks to the strong performance of automakers and financial services companies, the Stoxx 600 index rose in Europe, breaking a five-day losing trend. While Asian stocks fell, US futures cut their trading losses barely changed.
The MSCI World Stock Index remained above the 6-week low from the previous session, but headed for its third consecutive week of losses.
But traders remain cautious.
MSCI’s broadest index of Asia-Pacific stocks outside of Japan fell 0.5 percent, en route to its worst weekly performance since mid-June with a 3.6 percent drop as rising expectations of aggressive global rate hikes hit risky assets.
Under pressure from central bankers determined to quell inflation even at the cost of a recession, global bonds plunged into their first bear market in a generation.
The Bloomberg Global Aggregate Total Return Index of government and investment-grade corporate bonds is down more than 20 percent from its 2021 peak amid market concerns that rising interest rates will hurt GDP.
Investors are also rapidly exiting global equity funds, with the fourth largest weekly outflow of the year in the week through Aug. 31, according to BofA citing EPFR Global data.