Selling by overseas investors in index heavyweights dragged down benchmark indices after a gap-up opening on Friday, capping a volatile week that saw the US Fed keep interest rates steady.

Marginally better than anticipated Q4 earnings and a correction in oil prices led to a positive start to the week. A status quo by the Fed that hinted that rates could remain higher for longer led to a broad-based correction.

Market Turbulence

On Friday, the Nifty slid 0.7 per cent to end at 22,475, while the Sensex shed nearly a per cent to close at 73,878, more than 1,000 points below the day’s high.

The Nifty Bank closed 0.6 per cent lower to settle at 48,923. The volatility index, India VIX, rose sharply by 8 per cent to 14.62.

Cash market volumes on the NSE remained steady at ₹1.26-lakh crore. Broad market indices fell less than the Nifty even as the advance decline ratio fell to 0.52:1.

Bharti Airtel, Reliance Industries, and L&T slid over 2 per cent each. Coal India was the top gainer, up 4.5 per cent. A relief rally was seen in Bajaj Finance after the RBI lifted restrictions from its eCOM and Insta EMI Card with immediate effect, which was a major overhang on the company. Baring Pharma and Healthcare, all sectors ended in red.

Foreign Outflow

Foreign portfolio investors continued their selling spree, offloading shares worth ₹2,391 crore, while domestic investors bought shares worth ₹690 crore, provisional data showed.

“We expect a degree of consolidation in the market due to expensive valuations and any election-led jitters. The FPIs continue to remain net sellers in the market, which has impacted the performance of large-cap stocks,” said Vinod Nair, Head of Research, Geojit Financial Services.

He added that the ongoing results season will be a key factor for investors to align their portfolios. The market will also remain vigilant about the BoE policy and GDP data from the euro zone.

Global equities were mostly higher on Friday ahead of key US non-farm payroll numbers, helped by reassurance from the US Fed that the next move in rates would be down. Asian stocks surged to their highest in 15 months on Friday, with the Hang Seng index the top gainer.

US employers added a seasonally adjusted 175,00 jobs in April as the unemployment rate ticked up to 3.9 per cent.

The IMF upgraded India’s economic growth forecast to 6.8 per cent for FY25, driven by robust public investment. In April, India’s GST collection reached a record of ₹2.1-lakh crore, up 12.4 per cent from ₹1.87-lakh crore the previous year, driven by a robust 13 per cent increase in domestic transactions, indicating strong local demand.

The Nifty faces immediate resistance at 22600 levels, with the next downside at 22120.

“The short-term Nifty trend seems to have reversed down. The higher top of the bullish pattern is likely to have completed on Friday at the swing high of 22794, and the short-term downward correction is expected in the coming sessions,” said Nagaraj Shetti, Senior Technical Research Analyst, HDFC Securities.