After the high, a big fall: Sensex's 11-week winning streak ends

The Indian markets on Friday posted their biggest single-day fall in a month amid a slide in global equities and sell-off in the banking space. 

Most global stocks dropped, with investors pruning their bullish bets as rising Covid-19 cases sparked concerns about corporate earnings and economic revival. The dollar strengthened and yields rose due to inflation expectations.

The benchmark Sensex finished at 48,878.5, down 746 points, or 1.5 per cent, ending its 11-week gaining streak. The Nifty closed at 14,372, down 218 points, or 1.5 per cent -- the most since December 21.

FPIs sold shares worth Rs 636 crore, while domestic investors pulled out Rs 1,290 crore.

The Bank Nifty index plummeted 3.2 per cent after Bandhan Bank’s jump in provisions and deterioration in asset quality spooked investors. Shares of Reliance Industries fell 2.3 per cent ahead of the December quarter results announcement and dragged the Sensex lower by 143 points. The stocks of Axis Bank, State Bank of India, and ICICI Bank fell over than 3.4 per cent each. Shares of metal companies also plunged, with SAIL dropping 10 per cent and Jindal Steel and Hindustan Copper falling over 5 per cent each.

The fall in the markets was cushioned by gains in Bajaj Auto, Hindustan Unilever, and TCS. Shares of Bajaj Auto jumped over 10 per cent after it posted a better-than-expected rise in profits for the December quarter.

A day earlier, the Sensex had vaulted past the historic 50,000-mark, but failed to hold the gains as investors judged recent gains as excessive. Since November, the Indian markets have rallied more than 25 per cent amid record inflows by foreign investors. Since the March 2020 lows, the benchmark indices are up more than 90 per cent.

Not just India, but a slew of emerging markets also posted record highs this week on hopes of another round of stimulus in the US under the Joe Biden presidency. Already, the dovish outlook adopted by major central banks has helped fuel an unprecedented appetite for risk assets.

Earlier this week, US Treasury Secretary-designate Janet Yellen urged the Congress to “act big” on spending to shore up economic growth, while defending Biden’s $1.9 trillion coronavirus spending plan. The former Fed chair’s comments gave more fodder to the bulls to take stocks higher.

Market players said domestic investors could keep position light ahead of the Union Budget on February 1. Besides, Budget cues investors will keenly eye results announcements. Nine of the 12 Nifty50 companies that have declared their results for the December quarter surpassed analyst estimates.