Sensex, Nifty crash as global markets lose nerve

Mumbai: Dalal Street wilted under intense selling pressure on Friday, mirroring a meltdown in world equities as investors braced for slowing global growth amid policy tightening by central banks. A sharp drop in the rupee amid a spurt in crude oil prices and unabated foreign fund outflows added to the woes.

The 30-share BSE Sensex dived 866.65 points or 1.56 per cent to finish at 54,835.58. During the day, it tanked 1,115.48 points or 2 per cent to 54,586.75.

Similarly, the broader NSE Nifty tumbled 271.40 points or 1.63 per cent to settle at 16,411.25. Bajaj Finance was the top laggard among the Sensex components, skidding 4.91 per cent, followed by Axis Bank, Bajaj Finserv, Nestle, Wipro, HDFC, Infosys, HDFC Bank and UltraTech Cement. In contrast, Tech Mahindra, PowerGrid, ITC, SBI, NTPC and Sun Pharma mustered gains of up to 2.21 per cent.

On a weekly basis, the Sensex slumped 2,225.29 points or 3.89 per cent, while the Nifty lost 691.30 points or 4.04 per cent. "Markets were in southward direction right from the start of the trading session and selling intensified thereafter as rising crude oil prices reignited fears that inflation would pose a major challenge going ahead.

"The market is in a dilemma that in a rising interest rate scenario, a more hawkish stance by the RBI going ahead could hurt growth," said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd.

In the broader market, the BSE smallcap gauge fell 2.10 per cent and midcap dropped 2.06 per cent. Most BSE sectoral indices ended lower, with realty shedding 3.53 per cent, followed by metal (3.10 per cent), basic materials (2.80 per cent), consumer durables (2.41 per cent) and IT (2.27 per cent). Utilities and power settled with gains.

As many as 2,519 stocks declined, while 835 advanced and 106 remained unchanged. World markets, which had initially shrugged off the US Fed's rate hike, slumped on renewed worries about economic recovery amid interest rate increases and lockdowns in China. Meanwhile, the Bank of England raised its key interest rate to the highest level in 13 years on Thursday.

Elsewhere in Asia, markets in Hong Kong, Shanghai and Korea settled significantly lower, while Tokyo ended higher. Exchanges in Europe were trading in the negative zone in the afternoon session. Wall Street had plummeted in overnight trade on Thursday.

"A steep crash in the US stocks as the market evaluated the need for a higher rate hike to tame elevated inflation levels wounded global markets with heavy selling. "The Bank of England while raising its interest rates, warned about a possible risk of recession, aggravating investor fears," said Vinod Nair, Head of Research at Geojit Financial Services. International oil benchmark Brent crude jumped 2.20 per cent to USD 113.3 per barrel. The rupee plummeted 57 paise to close at 76.92 (provisional) against the US dollar on Friday, weighed down by a strong American currency overseas and firm crude oil prices. Foreign institutional investors remained in selling mode, offloading shares worth a net Rs 2,074.74 crore on Thursday, according to stock exchange data.