Despite big-bang FDI reforms by the Centre, the continuous stream of negative macroeconomic news dragged the stock market down to its lowest level in two months on Friday.
The benchmark indices closed down a percentage point, unable to sustain the slight momentum they gained during Muhurat trading on Wednesday.
The Sensex lost 256 points to end at 25,610.53, dragged down by metals, auto and IT stocks, and the Nifty finished at 7,762.25, down 62.75 points.
Global cues for the markets have been disappointing, according to Anand James, Co-Head, Technical Research, Geojit BNP Paribas. China and Japan reported falling industrial production numbers this week.
“The US markets also ended lower after crude oil prices tumbled to a two-and-a-half month low, after the US government report showed that domestic oil inventories rose four times above market expectations,” James said. Unemployment in the US has not improved either, as weekly data on jobless claims have stayed unchanged. As for Europe, he added, the European Central Bank chief said he would reconsider the economic zone’s monetary policy based on GDP data released this weekend.
Predictably, foreign investors were net sellers of equity on Friday, to the tune of ₹746.70 crore.
Domestic institutions bought net equity worth ₹70.89 crore while retail traders bought net equity worth ₹25.22 crore on the BSE. Markets remained mildly volatile through the day, with India Vix — the volatility reader — moving up 4.42 per cent to close at 17.6525. The fall in the broader markets was even steeper. The BSE midcap index shed 1.37 per cent while the smallcap index lost 0.76 per cent. News on the domestic front has also been disappointing, with inflation moving up while industrial production has fallen. IIP data fell to a four-month low of 3.6 per cent in September and the Consumer Price Index-based inflation for October rose to five per cent, the highest in four months.
Other factors Dipen Shah, Senior Vice-President, Kotak Securities, said the markets were largely impacted by the lacklustre quarterly results, expectations of a US rate hike, the BJP’s loss in Bihar and weak industrial production numbers.