Indian stock benchmarks plummeted on Friday, halting an eight-day bull run and a record-breaking six-day closing streak as investors took a breather and secured gains ahead of the major US jobs report, which could provide clues to the Federal Reserve’s tapering of its aggressive rate hike plan.
The BSE Sensex index fell 415.69 points, or 0.66 percent, to close at 62,868.50, and the broader NSE Nifty index fell 116.40 points, or 0.62 percent, to finish at 18,696, 10.
Still, the Nifty is up 3.6 percent over the past eight sessions, ending Friday with gains for the second straight week.
“Nifty futures outperformed their global counterparts, testing nearly 19,000 levels this week. However, it is showing clear signs of exhaustion in the near term, with lagging sectors such as IT now moving up and banks underperforming,” said Rudra Murthy BV, Research Head at Vachana Investments.
“Expect markets to post some gains in the coming week. The Nifty may test 18,400 to 18,600 support zones for the next big move. The local trigger comes from the Gujarat election results due to be announced on December 8.”
Both benchmarks recorded eight consecutive days of progress as they finished the previous session at an all-time high, marking the sixth consecutive day of an all-time high close.
The Sensex and Nifty closed at new highs every day since the record-breaking binge began last Friday.
Despite Foreign Institutional Investors (FIIs) selling shares worth 1,565.93 crore on Thursday and making a profit, capital inflows were strong in November as the Federal Reserve hinted at slowing the pace of its sharp rate hikes.
But the bulls were subdued on Friday ahead of the US nonfarm payrolls data set to be released later in the day after Wall Street stocks closed largely lower Thursday night.
“Investors are making some gains after the recent run-up. With higher valuations, there is a shift from expensive stocks to value stocks,” said Anita Gandhi, director of Arihant Capital Markets.
As traders awaited the monthly US jobs data for hints about impending policy changes from the Federal Reserve, global stocks were on the defensive Friday, stabilizing after recent big gains.
After two days of gains, putting it on course for a seven-week winning streak, Europe’s Stoxx 600 index fell, while futures for the S&P 500 and Nasdaq 100 fell.
A measure of Asian stocks fell for the first time in four days, with Japan leading the way as the yen’s five-day gains increased pressure on stocks to fall.
“The consensus is that a recession is coming, but stocks can’t bottom out before it starts. Inflation won’t come down anytime soon, so central banks can’t bat an eyelid. China’s reopening will be a messy process.” and Europe continues to be difficult,” noted Barclays Plc strategist Emmanuel Cau. .
Concerns about a recession have increased after data released on Thursday showed a decline in global factory activity in November, with US production falling for the first time since May 2020.
The time has come to scale back rate hikes, said Fed Chairman Jerome Powell, noting that “slowing down on this point is a good way to weigh the risks.”
With US data reaching a deflationary point, in addition to Mr Powell’s general easing in recent days, Commerzbank analysts concluded there was ample reason to price out aggressive rate hikes.
Meanwhile, the Chinese yuan rose and was poised for its biggest weekly gain since China revalued the currency in 2005, boosted by expectations of an exit from China’s zero-COVID policy and a slower pace of rate hikes by the Fed.
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