Markets witness massive selling on last day of week – top five pointers what led the drag

After a day’s halt in a declining trend, the Indian markets witnessed heavy selling intraday on Friday. The Sensex fell almost by 1000 points from the day’s high level and the Nifty50 dipped below the 17000-mark almost after 10 sessions, dragged by the auto, banking, and financial stocks most.

Underperforming the benchmarks, even the broader markets extended decline as both mid and small-cap slipped around 2 and 1.5 per cent, respectively, intraday today. Except for the IT stocks, all other sectors are in the red and are down between 1-2 per cent intraday. 

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Likhita Chepa, Senior Research Analyst, Capitalvia Global Research Ltd said, “Our research suggests that 56400-56600 may act as an immediate support level in the market. We can expect the market to trade till the lower range of 56400-56600.” 

Weak Global Cues 

The global markets, especially the US markets, on Thursday closed in the red with the Nasdaq slipping most by around 2.5 per cent, followed by S&P 500 down nearly 1 per cent, while the Dow Jones closed flat with negative bias. The impact of the same was quite visible in the Asian markets on Friday. 

The Japanese benchmark index Nikkei 225 closed almost 2 per cent lower, while Hong Kong’s Hang Seng too closed around 1 per cent and South Korea’s Kospi closed with minor gains. 

According to market expert, Likhita Chepa said, “On global front, Asian equity benchmarks traded in the red with some selling after previous session’s gains and on ignited concerns over impact of Federal Reserve’s monetary policy.” 

FII Selling 

The foreign institutional investors continued to be selling spree being cautious on multiple fronts. The global investors selling has dragged market by almost 1.5 per cent down, auto, banks, financials, FMCG and metal stocks each down between 2-3 per cent intraday. 

On Thursday, the foreign portfolio investors (FPIs) remained net sellers for Rs 1468.71 crore in the Indian markets. This has been continued for the quit some almost all of the December. 

Lower Than Expected US Eco Data 

The United States recently reported lower than expected economic data at 0.5 per cent year-on-year, the expectations by the majority of the analyst were at around 0.7 per cent. Moreover, the US Fed bond-tampering which was supposed to be after March is likely to be preponed from early 2022 itself. 

Omicron Scare 

Although Omicron, the new Covid variant is not much hazardous, as per World Health Organisation, the scare related to it continues as earlier this week the first death was reported in the United Kingdom due to it. Similarly, in India, without the patients having a travel history the Omicron infection toll has been gradually rising. 

Hawkish Central Bank 

The benchmark indices of the emerging markets have likely to be adapting to the hawkish stance of the key central banks, including the US Federal Reserve. In its policy meet earlier this week, the US Fed Reserve said that will be reducing its massive bond-buying programme, and doubling its taper to $30 billion per month. 

Meanwhile, the United Kingdom's central bank become the first key central bank from an advanced economy to up its interest rates since covid.