Indian equities ended in the red for the second consecutive session on Friday tracking decline in global markets and on increased uncertainty over the US fiscal cliff after US Republicans cancelled a tax vote in the US Congress late Thursday, with less than two weeks remaining for the Budget reform deadline.
Sensex dropped 1.09% or 211.92 points to end the day at 19,242 and Nifty settled 1.16% or 68.70 points lower at 5,847.70, tracking a similar fall in major Asian indices. Losses were even higher in the broader markets, with BSE midcap and BSE smallcap indices falling 1.5%, each. Moreover, all major sectoral indices ended in the red on Friday, with BSE realty index losing most in Friday's session (-3.5%).
Individually, metal stocks were the biggest loser on Friday. Jindal Steel and Sterlite Industries declined the most, with both scrips falling over 3%. Bharti Airtel, too, declined over 3% following reports that Central Bureau of Investigation (CBI) may file charges against the company as part of a broader case involving alleged irregularities in airwave allocations.
Market experts believe traders booked profits ahead of the weekend following series of negative news hitting the market. Investors adopted a cautious stance, as a result of year-end profit-booking activities amid lack of consensus over the US fiscal cliff talks, they said. Analysts also attributed the fall in markets to the forthcoming derivatives (F&O) expiry, which is less than a week away. According to exchange data, nearly one-third of positions for December expiry were rolled over to forward month contracts.
Among its peers, key benchmark indices in Asia ended in the red on Friday, with the Nikkei 225 and Kospi declining about 1% and Hang Seng declining 0.75%. The major European indices — DAX, CAC and FTSE 100 — were trading down nearly 1% on Friday.
According to Alastair Newton, senior political analyst and MD, Nomura International PLC, “The next 24 to 48 hours are, in our view, now critical. If markets continue to react negatively to Thursday’s events, we believe this is far from over — although, at best, we are now clearly going all the way to the wire. But we do need Obama and Boehner to re-engage quickly now.”
On a weekly basis, markets ended weak, with frontline and broader indices losing nearly 0.5% on a week-on-week basis. BSE Capital Goods index was the biggest loser, falling 1.95%, followed by consumer durables index, which declined 1.8%.