The benchmark indices Sensex and Nifty fell more than 1% each in Friday's trade, in line with the weakness seen across Asian markets, owing to an overnight slide in US stocks ahead of a key economic data release on nonfarm payrolls today, which may raise bets on a Federal Reserve rate cut later this month, but may also indicate further slowing of the US economy. At home, investors are concerned about high values following a recent extended winning streak at Dalal Street, prompting them to take some profits off the table.
The BSE Sensex dropped roughly 900 points, reaching a low of 81,304.46. It was subsequently trading at 81,439.38, down 761.78 points (0.93 percent). The NSE Nifty50 fell momentarily below 24,900 rupees. It was subsequently trading at 24,929.80, down 215.30 points (0.86 percent).
On the BSE, 1,254 active stocks were trading higher, while 2,411 declined. According to data, 217 stocks have already reached their lower circuit limitations. The BSE market capitalization declined by Rs 3.78 lakh crore to Rs 461.90 lakh crore from Rs 465.68 lakh crore in the previous session.
According to a Reuters survey of economists, August employment growth might be 1,60,000, up from 1,14,000 in July. The unemployment rate is expected to fall slightly to 4.2%, according to the survey.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, believes the market's near-term direction would be impacted by the US employment data, which will be released tonight.
"The Fed is expected to lower interest rates at its September meeting, but the magnitude of the decrease will be determined by employment market statistics. If the August jobs data are lower than expected and unemployment climbs more than expected, the Fed may decrease interest rates by 50 basis points. However, the market may not respond positively," warned Vijayakumar.
He believes the market may even respond negatively, citing major growth worries and a harsh landing scenario for the US economy.
"Investors can wait for this critical data and make a decision based on it," he said, adding that for Indian investors, the major issue is the inflated valuations, therefore they should prioritize buying properly valued quality equities on falls.
State Bank of India (SBI) was the Sensex pack's worst performer. The stock sank 3.41% to Rs 790.70 after Goldman Sachs raised its sell rating for the firm. Adani Ports, NTPC, and ITC all lost 2 percent. Reliance Industries fell 1.94 percent to Rs 2,929.10. HCL Technologies, Mahindra & Mahindra, Tata Motors, and Infosys all fell by more than 1.5 percent. Bajaj Finance rose 1%, while Hindustan Unilever and Asian Paints nudged higher.
Vikram Kasat, Head of Advisory at PL Capital, stated that stocks may be classified into two stages. The first is the narrative stage, while the second is the real earnings stage.
"Be cautious during the narrative phase, and invest less than usual." Many financial mistakes happen when we overestimate earnings, resulting in disappointments," he stated.
