| In Short |
| Sensex plunges 900 points; Nifty50 drops over 1%. |
| Market jitters linked to the upcoming US non-farm payrolls report. |
| Concerns over India’s valuation in the MSCI Emerging Markets Index. |
| Broad-based decline across all sectors, led by heavyweights like Reliance and SBI. |
| Oil prices steady; Indian rupee appreciates slightly against the US dollar. |
Market Mayhem Strikes on Friday
Indian stock markets witnessed a dramatic fall on Friday afternoon as the BSE Sensex nosedived 900 points and the NSE Nifty50 slipped over 1% on Friday afternoon. In mid-morning, the Sensex was trading at 81,317, while Nifty50 had slipped to 24,889. The sudden freefall has sent investors and analysts scurrying for an explanation behind this sudden turmoil in the market.
Global Concerns: US Non-Farm Payrolls Report and Its Impact
The main factor driving market volatility today is investor anxiety ahead of today’s US non-farm payrolls report. Global markets will attach substantial importance to the report later in the day, as it will be an illustration of insight into the US economy.
They expect to see the addition of 165,000 jobs and a small decrease in the unemployment rate to 4.2%. However, the weaker job openings and some speculation that the Fed might cut rates have increased uncertainty broadly in the markets.
As Santosh Meena, Head of Research at Swastika Investmart Ltd., said, “Weaker job data from the USA can trigger concerns about a global economic slowdown and add to jitters in our domestic markets.”
Domestic Factors: India’s MSCI Emerging Markets Index Weight
To add to the misery, the weight of India in the MSCI Emerging Markets Index has surged past that of China’s and reached an all-time high. This may sound good on the first face, but this raises the risk of a strategic reduction in weight allocation.
Meena says, “At its relatively high valuation, there is a risk that global investors could reduce their weight allocation, leading to outflows from the Indian market.”
Technical Analysis: Key Support and Resistance Levels
From a technical perspective, the Sensex is currently testing a crucial support level at 24,850. If the index falls below this point, it could trigger further declines towards 24,500 and 24,000. On the other hand, if the market manages to recover, the key resistance levels to watch are at 25,150, 25,330, and 25,500.
Sector-Wise Impact: Broad-Based Decline Across Sectors
The fall was across the board, with all the major sectors in the negative. Heavyweights Reliance Industries, SBI, ICICI Bank, and Infosys were also amongst the major contributors towards the decline.
Sectoral indices also closed in the red. Nifty PSU Bank and Oil & Gas slipped over 2% while others such as Auto, Media and Metal closed lower by over a percent each. The selling spilled over to broader markets as small-cap and mid-cap indices ended 0.9% lower and 1.3% lower respectively.
Global Market Sentiment: A Mixed Bag
The action was not uniformly upbeat across the globe, though. MSCI’s Asia-Pacific index was up just 0.2%. Japan’s Nikkei was marginally lower. US futures were also quoting with losses, which too dented investor mood a bit.
Foreign institutional investors (FII) turned net sellers and sold equities worth ₹ 688 crore on the domestic ground, while domestic institutional investors (DII) lapped up ₹ 2,970 crore worth of stocks.
Commodities and Currency: Steady Oil Prices, Slight Rupee Appreciation
Equally, the turmoil in equity markets had no effect on oil prices. Brent crude traded at $72.7 per barrel and US West Texas Intermediate traded at $69.16. The Indian rupee firmed a bit and was trading ₹83.9350 against the US dollar.
Navigating the Turbulence
Today’s market decline reflects a complex interplay of global uncertainties and domestic factors, leading to heightened investor caution. As the US non-farm payrolls report is awaited, and with concerns about India’s valuation in global indices, the market could experience further volatility. Investors are advised to stay cautious and closely monitor key support and resistance levels as the situation unfolds.
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