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Mumbai: Share indices ended sharply down on Friday in the absence of fresh triggers after having vaulted to all-time records last week and the central bank slashing growth estimates.
Losses on Friday were led by stateowned banks and auto stocks.
The Sensex and the Nifty ended 0.8 per cent down at 40,445.15 and 11,921.50, respectively.
Yes Bank, State Bank of India, IndusInd Bank, Tata Motors, Mahindra - Mahindra, Housing Development Finance Corp and Sun Pharmaceutical Industries were the biggest laggards on the Sensex, ending down 2-10 per cent.
The broader market saw deeper declines, with the BSE MidCap index ending down 1.3 per cent and the BSE SmallCap index ending down 0.9 per cent.
Foreign portfolio investors sold Indian shares worth a net ₹868 crore on Friday while domestic institutional investors bought shares worth a net ₹211 crore.
The Reserve Bank of India on Thursday cut the GDP growth forecast for FY20 to 5 per cent from the earlier projection of 6.1 per cent, owing to the slump in demand.
Markets rose to record highs in the recent rally, driven by sustained foreign flows into emerging markets given the accommodative policy stance by central banks globally.
‘Positive Triggers Needed’Between September 20 — when the government announced cut in corporate tax rates — and November end, the Nifty gained 12 per cent.
“The market has had a sharp rally post corporate tax cut and we need to see positive triggers for the market to move up further,” said Gopal Agrawal, senior equity fund manager at DSP Mutual Fund.
“The triggers are likely to come from quarterly results, budget or from the US-China trade war front.
The market is likely to go through a consolidation phase before the next leg of upmove.”
The Sensex touched an all-time high of 41,163.79 points and the Nifty hit a record 12,158.80 on November 28.
The market will await positive triggers on corporate earnings and the economic data front before moving up further, experts said.
“The market sentiment had improved in the last six months,” said Harsha Upadhyaya, CIO, equity, Kotak Mahindra AMC.
“The next leg of the rally in the market will depend on confirmation of recovery from economic data and earnings performance of corporates.”
The market resilience in recent weeks has primarily been on account of the narrowness of the rally, said Jefferies chief global strategist Christopher Wood said in his weekly note Greed - Fear on Thursday.
“The remarkable point is how resilient the Sensex has been in the face of the grim economic news and continuing earnings downgrades… It would be nice to think this is because the market has discounted everything.
But the resilience is primarily because of the narrowness of the rally,” he said.
“With the Sensex recently reaching its all-time high of 41,164 on 28 November, the real damage from the economic downturn is best captured in small- and mid-cap indices, which remain 40 per cent and 22 per cent below their all-time highs reached in January 2018.”
On technical charts, experts see the Nifty finding support at 11,850 in the immediate term.
“We are not seeing a big decline in the market,” said Rohit Srivastava, founder, Indiacharts.com.
“The Nifty is likely to find support at 11,850.
FIIs (foreign institutional investors) have added short positions of about 18,000 contracts since December 3 but they are far less than August-end when they were net short by 143,000 contracts.
We need to see if they add to their short positions going ahead.”
