Fears of an interest-rate hike in the US, concerns over Donald Trump taking over as President and the rise of US bond yields led to a sell-off in global markets, including Indian bourses, where over ₹3.22 lakh crore of investor wealth was eroded on Friday.

The Nifty lost 2.69 per cent and closed at 8,296, down 229 points, while the Sensex lost 2.54 per cent or 699 points to close at 26,819.

“Markets reversed all the gains of the previous day on the back of weak global markets and concerns over the stronger dollar and rise in yields in the US,” said Dipen Shah, Senior VP & Head, PCG Research, Kotak Securities.

“There are expectations of a rise in interest rates in the US and hence, a flow of money to the US. Markets were also concerned about the impact of the ban on ₹500/₹1,000 currency notes on the trade, especially in the consumption sector. Going ahead, the US rate hike and quarterly results are the other triggers that will impact markets and stocks.”

FPIs offloaded net equities worth ₹1,493 crore while DIIs and retail investors (on the BSE) had a net buy position of only ₹65 crore and ₹127 crore, respectively.

“There were concerns that Trump government policies will stoke inflation in the US, thereby sparking capital outflows from emerging markets,” said Karthikraj Lakshmanan, Senior Fund Manager – Equities, BNP Paribas MF

All the broader and sectoral indices closed deep in the red with auto, realty ,banking and FMCG being the worst affected. Volatility was significantly high with the volatility index India Vix closing at 17.3650, up 12.34 per cent.

Jayant Manglik, President, Retail Distribution, Religare Securities, had a word of caution: “Excessive volatility is causing damage to traders’ accounts at present and they’re finding it hard to handle their positions. And, we do not see any relief on that front amid looming uncertainty on the global front and not so encouraging domestic cues. So, we suggest restricting leveraged positions.”

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