Markets recoil for 4th day as global risks pile up

The Sensex and Nifty racked up losses for the fourth straight session on Friday, mirroring a risk-off sentiment overseas as stubborn inflation and faltering global growth sapped investor confidence.

The 30-share BSE Sensex opened on the backfoot and stayed in the negative zone throughout the session, ending 360.78 points or 0.61 per cent lower at 58,765.58.

On similar lines, the broader NSE Nifty declined 86.10 points or 0.49 per cent to close at 17,532.05.

Bajaj Finserv was the top laggard in the Sensex pack, diving 3.45 per cent, followed by Maruti Suzuki which lost 2.39 per cent after the country's largest carmaker reported a 46.16 per cent decline in September sales, impacted by the global semiconductor shortage.

Bharti Airtel shed 2.22 per cent after the Department of Telecom (DoT) slapped a penalty of Rs 1,050 crore on the firm based on sector regulator Trai's recommendation five years ago.

Asian Paints, Bajaj Finance, HDFC, NTPC, ICICI Bank and TCS were among the other losers.

On the other hand, M&M, Dr Reddy’s, UltraTech Cement, Sun Pharma, PowerGrid and Tata Steel were among the gainers, climbing as much as 3.05 per cent.

"Despite favourable growth in India's core sector output, which accelerated by 11.6 per cent in August from 9.9 per cent in July, domestic indices were in red reflecting weak global cues and losses in heavyweights. High Eurozone inflation at 3.4 per cent in September, slowing global growth and the existing Chinese crisis bolstered global sell-off.

"The auto sector is hold-on despite weak sales, in anticipation of festival demand, as numbers from major manufacturers showed a fall in September sales mainly due to semiconductor supply shortage," said Vinod Nair, Head of Research at Geojit Financial Services.

During the week, the Sensex plunged 1,282.89 points, or 2.13 per cent, while the Nifty declined 321.15 points or 1.79 per cent.

On the macroeconomic front, India's manufacturing sector activities improved in September as companies benefited from strengthening demand conditions amid the easing of Covid-19 restrictions.

The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) improved from 52.3 in August to 53.7 in September, indicating a stronger expansion in overall business conditions across the sector.

GST collection remained above the Rs 1 lakh crore-mark for the third month in a row at over Rs 1.17 lakh crore in September, raising expectations that second half of the year will post higher revenues.

"Indian equity markets have been creating new highs, despite global markets showing some sign of fatigue over the last couple of months. Nifty has outperformed most global equity markets, and posted a remarkable 12 per cent absolute return in 3Q CY21, compared to a flat quarter for developed markets.

"The September correction in the US markets does highlight some developing risks -- a surge in global inflation, oil and commodity prices, rising interest rates, Fed taper and the recent developments on the China front -- which could create intermittent disruption in investor sentiment. Indian markets are currently richly valued and therefore not immune from some of these headwinds," said Unmesh Kulkarni, Managing Director Senior Advisor, Julius Baer India.

However, given the strong earnings outlook trajectory, any meaningful correction in the equity markets can serve as an entry opportunity for long-term investors with a sufficiently long investment horizon, he added.

Sectorally, BSE realty, telecom, teck, finance and IT indices ended up to 1.56 per cent lower on Friday, while consumer durables, metal, healthcare and basic materials settled with gains.

Broader BSE midcap and smallcap indices ended on a mixed note.

Global equities languished as rising inflation and elevated energy prices cast a cloud over economic recovery.

Elsewhere in Asia, bourses in Tokyo and Seoul ended in the red. Shanghai and Hong Kong markets were closed for a holiday.

Markets in Europe were also trading with significant losses after Eurozone inflation spiked to a 13-year high in September.

Meanwhile, international oil benchmark Brent crude fell 0.47 per cent to $77.94 per barrel.

The rupee snapped a five-session losing streak to end 11 paise higher at 74.12 against the US dollar.

Foreign institutional investors remained net sellers in the capital market on Thursday, offloading shares worth Rs 2,225.60 crore, as per exchange data.

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