Friday fright: Nearly Rs 8 trillion wiped out as stock markets tumble

Benchmarks snap 4-day winning run amid global IT outage

India’s equity benchmark indices tumbled on Friday as investors rushed to book profits after the four-day winning run. A global cascade of IT outages also spooked investors. 

The Sensex began the session hitting a new high but gave up the gains. It ended at 80,605, with a decline of 739 points, or 0.9 per cent.

The Nifty50 hit an intraday high at 24,855, but ended the session at 24,531, with a drop of 270 points or 1.09 per cent.

Both indices ended the week with moderate gains of 0.1 per cent each. For both the indices this was their seventh consecutive week of gains, with the Nifty equalling its longest winning streak since December last year.

For Sensex, this is the longest weekly winning streak since January 2021. The decline on Friday wiped out investor wealth worth Rs 7.9 trillion. 

Reliance Industries, which fell 1.9 per cent, was the biggest drag on Sensex, followed by Tata Steel, which fell 5.2 per cent.

The gains in Infosys, the best-performing Sensex stock and the biggest gains contributor, help mitigate some losses. Infosys, whose quarterly results were announced post-market hours on Thursday, raised its revenue guidance for 2024-25 (FY25) to 3-4 per cent, an upward revision from the 1-3 the company had guided in the last quarter of FY24.

Analysts attributed the latest declines to profit booking ahead of the Budget.

 “The domestic market ended with a downturn due to the global sell-off, triggered by operating system issues that caused devices to crash worldwide. The global IT outrage has led to disruptions in various Indian industries. The overvalued market is also experiencing profit booking ahead of the budget next week. The recent performance has been bullish in anticipation of pro-industry and populist measures," said Vinod Nair, head of research of Geojit Financial Services.

Aviation and broking stocks fell as they faced some disruption in their functioning due to the global outage. 

The equity market is largely on an upward trajectory after a brief but sharp decline on the day of the Lok Sabha election results on June 4. From election result-day lows, the Nifty has jumped over 15 per cent, buoyed by hopes of policy continuity and strong macroeconomic indicators. The market's trajectory will depend on whether the FPI flows continue and the union budget next week.

"Investors are also cautious ahead of the Union Budget next week on July 23, which will provide the next direction for the market. Earnings season will also pick up pace, which will result in stock-specific actions,” said Siddhartha Khemka, head of retail research of Motilal Oswal Financial Services.

The market breadth was weak, with 3,071 stocks declining and 858 advancing. All the Sensex stocks, barring four, declined.