Sensex falls 450 points, Nifty drops 182 as weak global cues weigh on markets

Indian equity benchmarks Sensex and Nifty declined in early trade on Friday, tracking weak global cues and profit-booking after a strong November rally. Rising crude prices, inflation concerns and expectations of interest rate hikes weighed on market sentiment

Mumbai: Domestic equity benchmarks opened lower on Friday and extended losses in early trade, tracking weak global cues and profit-booking after the sharp November rally.

Sensex declined about 450 points or 0.55 per cent to 81,457.74 in early deals, while Nifty fell 182 points or 0.71 per cent to 25,117.

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Earlier, the Sensex opened at 81,833.78, down 77.23 points or 0.09 per cent, while the 50-scrip basket started the session at 25,209.85, down 89.50 points or 0.35 per cent.

Sectoral indices were also largely in the red zone, in which Nifty Realty led the fall, down over 1 per cent.

Meanwhile, Nifty Chemicals, Nifty Auto and Nifty Cement declined by up to 1 per cent. Nifty Oil & Gas, Nifty Private Bank, Nifty Consumer Durables and Nifty PSU Bank also traded lower.

On the other hand, healthcare and pharmaceuticals shares were trading higher. Nifty Pharma, Nifty Healthcare and Nifty 500 Healthcare surged up to 0.39 per cent.

However, the selling came after Nifty’s spectacular 9.7 per cent rally so far in November.

According to the market experts, the most important trigger for the swift rally was the aggressive comeback of the FIIs assisted by the weakening of the AI trade and improving earnings growth in India.

“Indications are that the FII buying will continue taking the monthly inflows easily to above Rs 1 lakh crore, which will be a record high. With this kind of aggressive FII buying, the bears will be on the back foot,” the market experts said.

They further noted that there are headwinds emerging that can spoil the party. Rising inflation in the US and India means a rising interest rate scenario which can turn out to be adverse for equity markets.

“In the US two rate hikes are likely in December and January. With the October CPI inflation in India rising to 6.09 per cent, the RBI will have to raise rates at least by 25 bp each in December and February. These concerns along with the ongoing DII profit booking can apply brakes on the rally, in the near term,” they added.

Additionally, Brent crude jumped to $95 per barrel amid fresh geopolitical concerns involving Saudi energy infrastructure and disruptions around the Strait of Hormuz.

In Asia, markets showed a mixed trend. Japan’s Nikkei traded about 1 per cent higher, while Hong Kong’s Hang Seng and South Korea’s KOSPI were up to 1 per cent down.

Overnight in the US, Wall Street ended lower on Thursday with the S&P 500 down 0.35 per cent and the Nasdaq down 0.39 per cent.