Benchmark indexes posted their biggest drop in a month on Friday amid a global stock sell-off ahead of a crucial U.S. jobs report that could determine the extent and speed of interest rate cuts by the U.S. Federal Reserve.
The S&P BSE Sensex closed the session at 81,184, down 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 drop for both indices since August 5.
The sharp fall also snapped the three-week bullish streak. The Nifty 50 ended the week with a 1.5 per cent drop, the worst since June 2.
Foreign portfolio investors (FPIs) sold shares worth Rs 621 crore, while domestic institutions pumped in Rs 2,121 crore.
“Nifty extended its decline to a third straight session, tracking a weak trend in global markets and fresh foreign fund outflows. Global stocks held near three-week lows on Friday, and crude oil languished near this year’s lows as caution prevailed ahead of crucial US jobs data that could decide the size and speed of upcoming rate cuts in the world’s largest economy,” said Deepak Jasani, Head – Retail Research, HDFC Securities.
The August U.S. jobs report, a monthly release eagerly awaited by investors to understand the extent of the slowdown in the world’s largest economy, is due later on Friday.
However, a raft of recent US data had already dampened sentiment and fuelled concerns about the health of the world’s largest economy. US manufacturing surveys, job openings and private sector payrolls were all weaker than expected.
The reports have led to speculation that the Federal Reserve could cut interest rates by 50 basis points (bps) at its September 18 meeting, as opposed to earlier expectations of a 25 bps cut.
Expectations of a slowdown have caused weakness in most markets worldwide.
“Global markets are adopting a cautious stance ahead of the release of US non-farm payrolls data. Moreover, continued decline in oil prices to a 14-month low and weak job openings data are raising fears of a slowdown in the US in the near term,” said Vinod Nair, Research Director at Geojit Financial Services.
In India, broader market indices posted a sharper decline compared to benchmarks, with the Nifty Midcap 100 down 1.59% and the Nifty Smallcap 100 closing 1.25% lower. Amid the broad sell-off, the India VIX fear gauge rose nearly 6.5% to 15.13.
All 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 drop in State Bank of India after global brokerage firm Goldman Sachs downgraded the stock to “sell”. Bharat Petroleum, ICICI Bank, NTPC and HCL Technologies were the other top losers in the large-cap indices.
Only a few Sensex and Nifty stocks like Asian Paints, Bajaj Finance and JSW Steel ended in the green.
The overall market breadth was negative with 1,403 stocks advancing and 2,544 declining on the BSE.
First published: September 6, 2024 | 18:51 IS
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