Weak global cues: Sensex slumps 549 points as investors book profit

The Sensex slumped 549.49 points, or 1.11%, to finish at 49,034.67.

Markets dropped the most in nearly four weeks on Friday, ending down over 1%, as investors locked in profits following the record-breaking rally. The Sensex slumped 549.49 points, or 1.11%, to finish at 49,034.67. The broader Nifty tumbled 161.90 points, or 1.11%, to end at 14,433.70. Investor wealth on declined by over Rs 2.23 lakh crore as markets cracked.

Concerns over stretched valuations and a bearish trend in global markets triggered across-the-board selling. Global cues remained weak with the markets in Germany, France and the UK declining by 0.56% to 0.87%. The markets in Taiwan, Japan and South Korea were down between 0.58% and 2.03%. The markets reacted to the rise in novel coronavirus cases in China, which made investors wary about the pace of the global economic recovery.

Even though the markets have had tepid trading sessions since Wednesday, the Sensex and Nifty have risen 0.5% and 0.6%, respectively, for the week.

Going forward, according to experts, the markets will react to events such as the US fiscal stimulus and the Budget, among others. Rusmik Oza, executive vice president – head of fundamental research, Kotak Securities, said: “Going forward, US stimulus, earnings season and Budget expectation could determine the market movement. We expect the Nifty to trade with a positive bias from here till Budget.”

IT stocks witnessed selling for the second straight session. The Nifty IT index fell by 2.4% and the major losers were Tech Mahindra, Coforge, HCL Technologies, Wipro and Info Edge, which fell by 3.95%, 3.88%, 3.77%, 3.64% and 2.7%, respectively.

Experts also attributed Friday’s market correction to rotational trade. Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said: “When a market is trading at such high levels, a correction such as the one on Friday is healthy. Due to the run up in the markets, there is a fatigue that is felt in some sectors, and so some rotational trade can take place.”

Foreign portfolio investors have pumped in capital worth $2.1 billion so far in January while domestic institutional investors have continued selling in the equity markets pulling out Rs 11,381.19 crore. On Thursday, FPIs bought stocks worth $143.4 million.

Major gainers on the Nifty were Tata Motors, Bharti Airtel, UPL, ITC and Grasim Industries with gains of 6.73%, 3.95%, 2.54%, 1.75% and 1.32%, respectively. Significant losers were Tech Mahindra, HCL Technologies, Wipro, GAIL and ONGC, down by 4%, 3.72%, 3.64%, 3.47%, and 3.28%.