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Indian equities slid over 1 per cent on Friday amid selling by overseas investors and negative global cues.
The possibility of fewer rate cuts by the US Federal Reserve this year, surge in commodity prices and the amendment in the India-Mauritius tax treaty spooked investors. Brent crude prices inched higher to $91 per barrel, while the dollar index moved closer to 106 levels. 10-year US bond yields were ruling at 4.5 per cent.
The Sensex slid 793 points or 1.1 per cent to 74,244 on Friday, while the Nifty fell 1.03 per cent to 22,519, capping a week of modest gains. Sixty per cent of the BSE components declined. Cash market volumes on the NSE were higher at ₹1.15-lakh crore.
Foreign portfolio investors sold shares worth ₹8,027 crore, while domestic institutions bought shares worth ₹6,341 crore.
Top losers
Maruti Suzuki and Sun Pharma were the top Nifty losers, shedding over 3 per cent each. All sectors ended in red, with oil & gas, PSU bank, and pharma indices the major losers.
“The uncertainty over the US Fed rate cut and concerns about rising tensions between Iran and Israel led to a decline in global markets. The rise in bond yields due to hotter-than-expected US inflation and amendment in the India-Mauritius tax treaty dampened sentiment,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
Moody’s Analytics on Friday projected India’s economy to expand 6.1 per cent in 2024, lower than 7.7 per cent growth clocked in the previous calendar year.
IMF warning
Kristalina Georgieva, Managing Director, International Monetary Fund, warned of a decade of sluggish global growth unless central banks restored price stability and global leaders addressed the issue of debt distress. The US Federal Reserve should be able to start lowering interest rates by the end of the year, she said.
Khemka expects markets to remain volatile in the near term given the global concerns and the start of an election next week. With the onset of the earning season, the focus will shift more towards domestic cues along with macro data, he said.
The Sensex closed above the 75,000-mark for the first time on Wednesday, a fresh high. The market capitalisation of shares listed on the BSE hit ₹400-lakh crore earlier in the week.
Pundits believe the market is marginally overvalued, with the 12-month trailing P/E for the Nifty at 22.7x, a 2 per cent premium to its long period average of 22.4x. India’s market capitalisation-to-GDP ratio, at 132 as of FY24, is much above its long-term average of about 80 per cent.
Asian stocks fell on Friday, led by Hong Kong, amid weak import export March data from China. The US has added six Chinese companies to an export blacklist accusing them of seeking to acquire AI chips for China’s military or helping to procure drones for use by Russia.
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