Foreign institutional investors stepped up selling of Indian stocks on Friday, causing benchmark indices to fall 1.3% on growing concern that the slowdown in the euro zone is far from over.
Investors were also influenced by the heavy sell-off on Wall Street on Thursday after senior US Fed officials said they expect interest rates to rise by mid-2015. Even a sharp decline in oil prices failed to cushion the fall on Friday.
The sell-off resulted in the stock market giving up the previous day's gains, which were sparked by contents of the US Federal Reserve's minutes of September meeting suggesting that the US central bank is not in a hurry to hike interest rates.
"There is total confusion about the direction of the developed economies, which is worrying the markets. In the absence of any domestic triggers, the focus will remain on global events," said Tirthankar Patnaik, director, institutional research, Religare Capital.
BSE's Sensex fell 339.90 points, or 1.28%, to close at 26,297.38. NSE's Nifty dropped 100.60 points, or 1.26%, to close at 7,859.95. Out of the 3,023 stocks traded on the BSE, 1,910 declined, while 998 gained, showing the market breadth was weak.
Metals, consumer goods and auto shares led the sell-off, while technology shares bucked the weak trend after Infosys' second quarter earnings surprised the market. Foreign institutional investors net sold shares worth almost Rs 720 crore on Friday, extending their selling spree to the third straight week worth Rs 3,800 crore. So far in 2014, these investors have net bought shares worth Rs 90,000 crore.
Most Asian markets fell 1-2% on Friday after euro zone's largest economy, Germany, saw a slump in exports, reviving fears that the region may slip into a recession. International Monetary Fund managing director Christine Lagarde warned that the euro zone could fall back into recession if fresh steps are not taken to prevent it. She also said the euro zone is showing the symptoms of Japan's protracted economic slump.
Wall Street had slumped 2% on Thursday after Fed vice chairman Stanley Fisher and San Francisco Fed president John Williams both said they expect higher interest rates by mid-2015. Oil prices fell on worries a slowdown in the global economy would hit demand. Brent crude fell $1.65 to $88.40, levels last seen in November 2010.
Source : economictimes