Nifty50, Sensex snap eight-day winning streak
End in the green for a second straight week
Indian equity benchmarks on Friday snapped their eight-day gains amid weak global cues ahead of the release of US jobs data. Investors also booked some profits after the benchmark indices climbed to record levels, raising concerns over valuations.
The BSE benchmark Sensex ended the session at 62,868, a decline of 415 points, or 0.6 per cent. The Nifty50 closed at 18,696, falling 116 points, or 0.6 per cent. But both indices gained for a second straight week. The latest fall narrowed the weekly gain to less than a per cent. The broader markets outperformed during the week, with the Nifty Midcap index gaining 3.1 per cent and the Nifty Smallcap rising 2.34 per cent.
Global markets were weak as investors were awaiting US jobs data to gauge the direction of rate hikes. Reports suggested that the jobs report might indicate that the labour demand is ebbing but a bigger slowdown is necessary to contain wage growth that helped fuel inflation.
Moreover, recession fears in the US spiked after the factory activity data showed that American manufacturing contracted for the first time since May 2020.
“Declining manufacturing activity in the US is proof that the central bank’s policy tightening has started to show results, which in turn will encourage the Fed (US Federal Reserve) to keep rate hikes at bay,” said Vinod Nair, head of research, Geojit Financial Services.
There are also signs of pressure on US corporate earnings with Salesforce becoming the latest firm to warn of slowing sales. Many US giants, including Amazon, have already announced job cuts.
In the preceding four sessions, the Sensex gained close to 4 per cent.
“Gains over the past few days are being digested and markets are looking at fresh data points to decide the further direction,” said Deepak Jasani, head of retail research, HDFC Securities.
Hopes that the Fed might go soft on their rate hikes and China might ease its Covid-19 restrictions had fuelled the gains in equities this week.
Apart from the jobs report, investors will be keenly tracking the annual convention of the Chinese Communist Party's top decision-making body which is expected to outline the plan for Covid-19 controls. Brent crude gained during the week and ended Friday's session at $86 per barrel after Opec’s decision to cut crude supply by the most since 2020.
“Indications are in favour of further consolidation in the index but the tone would remain positive till Nifty upholds 18,300. And, since all the sectors are participating in the move, traders should utilise this phase to add quality names on dips,” said Ajit Mishra, VP, Technical Research at Religare Broking.