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Stock mkts plunge on US growth concerns
Over 1% fall for Sensex, Nifty halts 5-day rally as investors dial back risk exposure in metal, auto and IT stocks on weak US jobs data
Mumbai: Halting its five-day winning run, benchmark BSE Sensex plunged 885 points on Friday due to profit-taking in metal, auto and IT stocks in line with a global selloff triggered by weak US macro data.
The 30-share BSE Sensex tanked 885.60 points or 1.08 per cent to close at 80,981.95 with 25 of its components declining and five ending with gains. During the day, it nosedived 998.64 points or 1.21 per cent to hit an intra-day low of 80,868.91. Retreating from its record 25,000 level, the broader Nifty of NSE plummeted 293.20 points or 1.17 per cent to end at 24,717.70. The 50-issue index fell 324.05 points or 1.29 per cent to 24,686.85 during the session.
“As global equity indices tumbled, investors in domestic markets too felt the heat and resorted to profit taking. The recent upsurge had made Indian stocks very expensive and hence correction was due for some time. Despite the slump, our resilient economy and strong fundamentals along with healthy corporate earnings would keep the downside limited,” said Prashanth Tapse, Senior V-P (Research), Mehta Equities Ltd. The BSE SmallCap gauge fell 0.58 per cent and MidCap by 1.19 per cent in the broader market. “Weak earnings from the US IT sector, a potential rise in unemployment, the possibility of further rate hikes by the BOJ, and a slowdown in China's growth are all dampening market sentiment. Q1FY25 earnings have been lackluster so far, while broader market valuations remain significantly high,” said Vinod Nair, Head (Research), Geojit Financial Services.
Among the indices, realty tumbled by 3.56 per cent, metal by 3 per cent, auto by 2.97 per cent, IT by 2.05 per cent, commodities by 1.83 per cent, teck by 1.79 per cent and capital goods by 1.70 per cent were the laggards. “A rout in Japanese markets deepened after the Bank of Japan struck a hawkish chord this week. Concerns over outlook for tech companies also weighed,” added Deepak Jasani, head (retail research), HDFC Securities. Analysts said the sudden turn for the worse for the US economy reflected in the ISM Manufacturing index dipping sharply to 46.6 spooked developed country markets, bringing back recession fears in the US.
