Indian markets once again fell succumbed to weak global cues on Friday as key indices mirrored their global counterparts. Tracking weak data from the US economy, the 30-share Sensex tumbled by more than 852 points in intra-day trading before finally settling below the psychological mark of 16,000 at 15,975.52 points, losing 566.56 points or 3.42%.
While the broader S&P CNX Nifty lost 149.8 points or 3.04%, before closing the day at 4,771.60 points. The Sensex has lost more than 9% in the last four trading sessions, while the Nifty plunged by more than 8.5%.
With Friday?s tumble, market experts believe that Indian markets are more than correcting- they are already in an intermediate bear phase. This is typically a three-to-four month phase where the markets tend to ignore all good news and keep moving downwards. The reasoning is that the benchmark indices have corrected by more than 25% in the last two months and are now comparable with the bear markets of 2004 which lasted for 4 months and when indices lost more than 32%. Similarly, the bear phase of 2006 lasted for two months with key indices losing more than 30%.
Gopal Agarwal, CIO, Equity, Mirae Asset Management said, “A combination of reasons are responsible for the fall . Increasing commodity prices eliminates the government?s decision to cut interest rates to manage inflation . Second, the problematic conditions in the western world are keeping foreign firms at bay, hence the absence of strong buying trends.” Add to this the fact that the headline inflation rate for the week ending on February 23 rose to 5.02% from 4.89% a week earlier. Triggers for a positive move could be in the form of advance payment of corporate tax and the US Federal Reserve meet scheduled next week, added Agarwal.
Other Asian markets also reacted negatively to the overnight fall in the US markets with Hong Kong ?s Hang Seng plunging by more than 841 points or 3.60%, to close at 22,501 points, while Japan’s Nikkei fell by 432.62 points or 3.27% to end the day at 12,782.80 points.