Sensex dropped 1.09% or 211.92 points to end the day at 19,242 and Nifty settled 1.16% or 68.70 points lower at 5,847.70, tracking a similar fall in major Asian indices. Losses were even higher in the broader markets, with BSE midcap and BSE smallcap indices falling 1.5%, each. Moreover, all major sectoral indices ended in the red on Friday, with BSE realty index losing most in Friday's session (-3.5%).
Individually, metal stocks were the biggest loser on Friday. Jindal Steel and Sterlite Industries declined the most, with both scrips falling over 3%. Bharti Airtel, too, declined over 3% following reports that Central Bureau of Investigation (CBI) may file charges against the company as part of a broader case involving alleged irregularities in airwave allocations.
Market experts believe traders booked profits ahead of the weekend following series of negative news hitting the market. Investors adopted a cautious stance, as a result of year-end profit-booking activities amid lack of consensus over the US fiscal cliff talks, they said. Analysts also attributed the fall in markets to the forthcoming derivatives (F&O) expiry, which is less than a week away. According to exchange data, nearly one-third of positions for December expiry were rolled over to forward month contracts.
Among its peers, key benchmark indices in Asia ended in the red on Friday, with the Nikkei 225 and Kospi declining about 1% and Hang Seng declining 0.75%. The major European indices DAX, CAC and FTSE 100 were trading down nearly 1% on Friday.
According to Alastair Newton, senior political analyst and MD, Nomura International PLC, The next 24 to 48 hours are, in our view, now critical. If markets continue to react negatively to Thursdays events, we believe this is far from over although, at best, we are now clearly going all the way to the wire. But we do need Obama and Boehner to re-engage quickly now.
On a weekly basis, markets ended weak, with frontline and broader indices losing nearly 0.5% on a week-on-week basis. BSE Capital Goods index was the biggest loser, falling 1.95%, followed by consumer durables index, which declined 1.8%.
JP Associates declined the most this week, with the scrip falling 4.73%. L&T too declined 3% from last week. Banks also remained under selling pressure following the outcome of mid-quarter policy review of the Reserve Bank of India. HDFC Bank, Kotak Mahindra Bank, Axis Bank, HDFC, IDFC, among others declined in the range of 1.5% to 3%. Consumer giant, ITC also declined 3% on a week-on-week basis.
Metals stocks, however, posted sharp week-on-week gains despite the fall in Friday's session. Tata Steel was the top gainer among the frontline stocks, gaining 8.5% from the previous week. Hindalco Industries gained 7.8% week-on-week, while Jindal Steel & Power and Sesa Goa gained 5.4% and 3.7%, respectively.
Experts stated that markets are generally subdued during this time of the year and remained hopeful of Indian markets to trend higher based on government reforms and expectations of interest rate cut by the RBI next month.
The winter session of Parliament has ended and it was not as bad as was earlier expected...Markets will trend up sustainably, only if further core sector reforms are announced and implemented. We believe, this is necessary for FY14 earnings estimates to be revised upwards which, in turn, will likely support the markets, aid Dipen Shah, head private client group research, Kotak Securities.