Sensex plunges 588 points to close below 46,500; Nifty ends at 13,634

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After a gap up opening, the BSE Sensex and BSE Nifty ended Friday’s volatile session more than 1% lower, dragged by heavy selling in IT and auto stocks.

Maruti Suzuki, Bajaj Auto, Infosys, Bharti Airtel, and Bajaj Finserv, down between 5% and 2.5%, were the top losers. On the flipside, IndusInd Bank, Sun Pharma, HDFC Bank, and ICICI Bank were the only gainers on the Sensex.

On the other hand, Nifty50 broke 13,700 levels and fell 183 points to close at 13,634. Both the benchmarks have erased around 5% during the week. The 30-share index settled 588 points, or 1.26%, down at 46,285.

The broader market outperformed the benchmark indices as Nifty Midcap100 and Nifty Smallcap100 ended 0.38% and 0.63% lower, respectively. Whereas Bank Nifty closed at 30,565 up 207 points.

The market mood has turned fragile as investors have become wary of risks from the upcoming union budget and also selling by FIIs for three days this week.

Economy Survey 2021-22 The Economic Survey 2020-21, tabled by Finance Minister Nirmala Sitharaman in the parliament on Friday estimates India’s GDP to contract by 7.7% in FY2020-21, composed of a sharp 15.7% decline in the first half and a modest 0.1% fall in the second half.

In the year 2021-22, a sharp recovery of real GDP growth of 11% is expected based on a low base effect and inherent strengths of the economy.

The Indian government may need to continue with an expansionary fiscal stance to sustain the recovery in aggregate demand, said the Economic Survey for 2020-21.

The survey further said that the soon-to-conclude financial year is likely to see a fiscal slippage and added that the expenditure support provided during the year will impart the required momentum to mid-term growth.

Global markets

Shares in Asian and Europe declined across the board on Friday. Tensions between vaccine maker AstraZeneca and the European Union continued on Thursday, with the bloc warning drug companies that it would wield all possible legal power to prevent exports unless they committed to supplying inoculations as promised. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.1% and is on course for a weekly loss of 4.4%. Japan’s Nikkei fell 1.9%, recording its first weekly loss of the year.

Experts’ take

Vinod Nair, Head of Research, Geojit Financial Services Weakening global trend due to the concerns of speculation and slowing economic recovery has hugely impacted the cautious pre-budget domestic market. The pace of recovery in the US and Europe has slowdown, having implication on Indian exports and FII inflows. In this waning domestic trend, Budget will be the key to provide strength and perform better compared to the rest of the world. Expectations are high that the government should maintain the populist and reformist agenda of maintaining the mass sentiments, deficit discipline and growth in difficult pandemic period.

Deepak Jasani, Head of Retail Research, HDFC Securities Investor concerns have also grown over speculation of a shift to tighter monetary policy in China as short-term money rates rose for a fifth day on Friday, with one key rate hitting its highest since 2015. The People’s Bank of China (PBOC) injected 100 billion yuan into the financial system on Friday to address the tight liquidity situation.