Indices end 8-day rally ahead of US jobs data

Benchmark indices fell 0.5% at market open, dragging the Sensex below 63,000 and the Nifty below 18,800. Both indices went on to lose nearly 1% in choppy trade before recovering some of the lost ground.

The 30-share benchmark eventually closed at 62,868.50, down 415.69 or 0.66% from the previous close. The Nifty declined 116.40 points or 0.62% to close at 18,696.10. “Market is showing some signs of fatigue,” said Andrew Holland, CEO, Avendus Capital Alternate Strategies, the alternate asset management arm of Avendus Capital. “We have seen bullish positions trimmed ahead of the crucial US jobs data and traders keeping it light ahead of the weekend.”

Holland said Indian markets are taking a break after steadily rising since early October, but did not rule out any further upmove.

The outcome of key economic data as well as policy meetings of the Indian and US central banks in the span of next 10 days may determine the course for Indian equities in the near term, Holland said.

ET Bureau

Benchmark indices have risen 11-12% since early October as foreign funds resumed buying activity, making Indian markets among the best performing in the world and, at the same time, sending valuations higher than peers and their own historical average.

FPI buy shares worth net Rs 215 cr


“There is fatigue in large-cap stocks after the recent rally, which could limit the speed of any upmove in main indices in the near term,” said B Gopkumar, MD and CEO, Axis Securities. “We are seeing money shifting from large-caps to midcaps and small-cap stocks whose valuations are cheaper.”

The Sensex is at about 22 times its one-year forward EPS compared with its historical average of 18-19 times.

Foreign portfolio investors (FPIs) bought Indian shares worth a net Rs 214.76 crore on Friday, showed provisional stock exchange data. Their domestic counterparts bought shares in the cash segment worth Rs 712.34 crore.

“Intermittent bouts of correction are healthy for markets as it removes the froth,” said Sriram Velayudhan, vice president, alternative research,

. “Market is indicating that traders are booking profits ahead of the weekend after seeing a nearly 350 points upmove since the start of December expiry.”

Nifty has support at 18,600-18,500 and a likely fall from those levels will act as a buying opportunity for a rise toward 18,900-19,000 in the near term, Velayudhan added.

Overnight, the strength in US equity markets fizzled out and key averages ended mixed ahead of US non-farm payroll data, the next big test for investors looking for indications on the stance of the US Federal Reserve’s path to monetary policy tightening.

In Asia, most of the major averages ended in the red while in Europe they were trading mixed. The Stoxx Europe 600, a pan-European gauge, recovered early losses but was still down 0.1% at press time.

Brent crude oil prices were hovering at $87-88 a barrel ahead of the meeting of oil-producing nations to decide the next level of production. Brent crude oil futures, which touched $81 a barrel to the lowest level in 2022 earlier this week, inched closer to $90 a barrel on Thursday as speculation of production cuts by the Organisation of the Petroleum Exporting Countries (Opec) and allies, including Russia, gathered pace.

Back home, 23 of the 30 Sensex companies ended in the red led by automobile and consumer staples stocks. Mahindra & Mahindra (-2.24%) was the top loser.

Interestingly, the broader markets outperformed the frontline stocks with the NSE Midcap 100 index rising 0.9% and within 2% of its all-time high of 33,243.50 seen on October 19 last year.

India VIX, a measure of traders’ expectations of near-term risks to the market, rose 0.67% to close at 13.45. The VIX had touched a high of 33.97 in March, when the US Fed increased key lending rates for the first time.