The equity benchmarks underwent a massive sell-off on Friday, with the Sensex falling over 1,000 points intra-day to slip below the 55,000 mark amid weak global cues and worries over slowing global growth. The Bank of England, while raising interest rates, warned about a possible shrinkage in the economy in 2023. Prior to this, the US Federal Reserve raised interest rates by 50 bps, which is the highest in 22 years, and the Reserve Bank of India (RBI) in a surprise move hiked the repo rate by 40 bps.
The market’s fear gauge climbed another 4% on Friday to 21.25. Investor wealth, reflected by the total market capitalisation of all BSE-listed companies, declined by Rs 4.47 lakh crore to Rs 255.17 lakh crore, compared with Rs 259.64 lakh crore in the previous session. The decline was broad-based as 14 out of the 15 sectoral gauges compiled by the NSE ended in the red on Friday – with the Nifty Realty and IT falling 3.5% and 2.2%, respectively. The Nifty Bank declined 1.8%. The broader markets, however, underperformed the benchmark indices as both the BSE mid-cap and small-cap indices fell over 2% each.
Among Sensex stocks, Bajaj Finance and Axis Bank were the top losers, falling 4.9% and 4.1%, respectively. Overall, on the BSE, out of the 3,460 stocks traded, 2,616 declined on Friday.
After falling 1,116 points intra-day, the Sensex ended lower by 866.65 points or 1.5% to 54,835.58 while the Nifty-50 declined 271.40 points or 1.6% to close at 16,411.25. The Nifty now stands 831 points lower from its 200-day simple moving average of 17,242.13. Further, with Friday’s fall, the benchmarks also marked the fourth straight week of decline amid several global headwinds.
gGlobal sell-off on account inflation concerns, hawkish central banks commentary and surge in US bond yield to above 3% has led to the fall on Friday. Further, no signs of abatement on the war front continues to keep supply issues aggravated, which is increasing the pressure on corporate margins. We expect the markets to remain volatile in the short run due to multiple moving parts,” Hemang Jani, head – equity strategy, broking and distribution, Motilal Oswal Financial Services, told FE. However, he believes that the sharp correction in the markets is also providing a good entry point for investors to accumulate blue-chip stocks.
Markets in the US posted massive losses overnight – with the Nasdaq composite falling 5%, its highest one-day percentage decline since June 2020. Dow Jones and S&P 500 declined 3.1% and 3.5%, respectively. In Asia, except for Japan’s Nikkei 225, all other major indices ended in the red on Friday. Shanghai fell 2.1%, while Hang Seng ended lower by 3.8%.
Deepak Jasani, head of retail research, HDFC Securities, said: “The US dollar hit 20-year highs and world stocks fell towards their lowest in over a year on Friday as markets expected more US interest rate rises, while Asian stocks fell on worries about the hit to growth from China’s zero-COVID policy.”