Markets retreat from record highs as global markets fall
MUMBAI: Indian equities retreated from record highs on Friday after a global sell-off by investors who were spooked by worse-than-expected earnings reported by firms ranging from American internet giant Amazon.com.Inc. to French automaker Renault SA.
Potential unrest in Pakistan following Prime Minister Nawaz Sharif’s disqualification from office, which led to his resignation, also shook investors in South Asia.
Sensex closed down 0.23% at 32,309.88 points, while the Nifty fell 0.06% to 10,014.50 points, after scaling record highs in the four previous sessions. Both gauges would have fallen more but for steady buying in Infosys Ltd and Housing Development Finance Corp. Ltd.
A domestic sell-off in shares of pharma companies, which reported poor earnings, drove down Indian indices. The global rout was sharpest in technology shares. Overnight, Amazon and Twitter shares dragged on US tech stocks after the former forecast a potential loss for the first time in two years.
In the June quarter, the technology giant posted a profit of $197 million, down 77% from a year ago. US stock index futures were lower on Friday. Amazon’s shares were down 2.96% in premarket trading.
Europe’s benchmark equity gauge headed for a three-month low as automakers also slumped after Renault SA’s profit fell short of estimates.
ASML Holding NV paced technology-stock losses in the region after Samsung Electronics Co. Ltd and Tencent Holdings Ltd led declines in Asia. These dragged indices such as Kospi by 1.73%, Hang Seng by 0.56% and Japan’s Nikkei 0.6%. The MSCI Asia Pacific Index dropped 0.7%, erasing its gain for the week. Technology shares in the gauge fell 1.5%.
The sell-off came after US and global stocks rallied to records amid signs of economic growth and as more than three-quarters of reporting S&P 500 companies delivered earnings that beat forecasts. Technology shares have led the charge, with companies in the sector soaring 22% this year for the best performance among 11 groups in the S&P 500.
“With Amazon’s earnings falling short of estimates, the US market may readjust its expectations,” said Hideyuki Ishiguro, a senior strategist at Daiwa Securities Co. in Tokyo.
India’s relatively stable macroeconomic environment will serve as a shield, analysts said. On Monday, the International Monetary Fund kept its outlook for India’s gross domestic product growth rate unchanged at 7.2% in 2017-18 and 7.7% in 2018-19.