Indian benchmark indices witnessed dramatic selling in the last hour of trading on Friday, with the BSE Sensex falling 1,092.06 points to 74,775.74 and the NSE Nifty falling 359.40 points to 23,547.75.
The benchmarks had traded in positive territory for most of the session, boosted by easing concerns over tensions in the Middle East and strength in select technology stocks. However, sentiment reversed sharply after 3pm, triggering a broad-based selloff that erased earlier gains and pulled both the indices to their day’s lows by the closing bell.
Market participants attributed the late slowdown to profit-booking, persistent foreign fund outflows, uncertainty around global geopolitical developments and concerns over the impact of below-normal monsoon rainfall on the economy and inflation.
Selling pressure was seen across most sectors, with financials, metals and FMCG stocks falling the most. Information technology stocks offered some support during the day but were unable to stem the sharp decline in the headline indices.
The sharp decline in the final hours also reflected increased investor caution, with traders reducing risk exposure ahead of key global developments and fresh domestic triggers. Volatility increased as selling intensified at large-cap counters.
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The sharp decline is one of the biggest one-day declines for the benchmark in recent weeks, underscoring the fragile sentiment prevailing in the market despite positive global cues early in the session.
Investors will now closely monitor foreign institutional investor activity, crude oil prices, geopolitical developments and domestic macroeconomic indicators for further direction in the coming sessions.
Rupee bounced back
The rupee rose 53 paise to close at 95.05 (provisional) against the US dollar in early trade on Friday as renewed optimism over the peace deal between the US and Iran boosted market sentiment.
Forex traders said the USD/INR pair appreciated due to an overnight fall in crude oil prices and a fall in the US dollar after the US and Iran agreed to extend the ceasefire for another 60 days.
On Thursday, US and Iranian negotiators reached a tentative agreement to extend the ceasefire for 60 days and begin a new round of talks on Iran’s nuclear program.
At the interbank foreign exchange market, the rupee opened at 95.77 against the US dollar, then touched a high of 94.97 and a low of 95.78 during the day.
At the end of Friday’s trading session, the rupee was quoted at 95.05 (provisional), 53 paise higher than its previous close.