The domestic stock market came under heavy selling pressure on Friday that saw headline indices tumble around 2 per cent. The S&P BSE Sensex plunged 690 points to close the session at 35,742. The broader Nifty50 index of National Stock Exchange (NSE) slipped below 10, 800 level to end at 10,754.
"Concerns on global economy growth and threat of partial US government shutdown created headwinds to the domestic market. Rupee gave up some gains due to volatility in bond yield. However, fall in oil prices is expected to provide strength to rupee in the near term. Investors are using this opportunity to book profit after the recent rally, the market direction will turn positive as domestic economic indicators remain healthy," said Vinod Nair, Head of Research, Geojit Financial Services.
Here’s a look at the top factors that dragged the market lower –
Global sell-off: Global stocks crashed on Friday as the threat of a US government shutdown and of further hikes in US borrowing costs capped risk-taking appetite for investors, pushing them to safe haven assets. According to a Reuters report, the S&P 500 was heading for its worst quarter since the dark days of late 2008, with a loss of 15 per cent so far. The Nasdaq has shed 19.5 per cent from its August peak, just shy of confirming a bear market.
Japan’s Nikkei lost 1.1 per cent to close at its lowest since mid-September last year while Australian stocks slipped 0.7 percent, hovering just above a two-year trough hit earlier in the session. Chinese blue chips lost 1.4 per cent in the trade.
Profit-booking: Investors booked profits in heavyweights such as Reliance Industries (RIL), Infosys, TCS, ICICI Bank, HDFC and ITC during the session, which pulled the market lower. RIL alone contributed over 93 points in the Sensex’s fall, followed by IT majors Infosys (80 points) and TCS (63 points).
Growth concerns weigh on IT stocks: Global growth concerns and a possible shutdown of the US government weighed on IT stocks. The rupee's movement against the US dollar over the past few sessions also impacted sentiment. Infosys, TCS and Wipro lost 2.5 per cemt to 3.1 per cent. Tech Mahindra, NIIT Technologies, HCL Technologies and Tata Elxi also ended weak.
Mid, small-caps slump: In line with their larger peers, investors also booked profit in mid-and small-cap stocks with both the respective indices slipping 1.8 per cent and 1 per cent, respectively on the BSE. Shriram Transport Finance, Cummins India, Tata Power, Oberoi Realty from the mid-cap segment and Ahluwalia Construction, Kabra Extrusion, Plastiblend India and Sical Logistics from the small-cap segment were among the top losers.