Equity markets faced a sharp decline on Friday as the Sensex gained over 1,000 points, trading at 80,225.59 at 10:37 AM. The Nifty also fell 332 points to move at 24,216.60, indicating widespread market weakness. All major industry indexes and broader markets were in the red, with the volatility index up 2.83 percent.
FII Selling Adds Pressure
Foreign Industrial Investors (FIIs) sold shares worth Rs 3,560 crore on Thursday, fueling the fall in markets. Steady selling pressure, fueled by higher valuations in Indian markets, has resulted in profit booking by FIIs, especially with the recent appreciation of the dollar.
Rupee Hits Record Low
The rupee continued its slide, hitting a record low of 84.88 against the US dollar on Thursday. Despite the Reserve Bank of India’s intervention through state-owned banks, the depreciation of the rupee has raised concerns about rising foreign currency inflation, adding to markets.
Decline in Industry Sentiment
Key sectors such as metals, IT, banking, and automobiles suffered selloffs. Nifty Metal was down 2.01 percent, while Tata Steel and JSW Steel were down around 3 percent. Banking stocks were also hit hard, with IndusInd Bank down 1.93 percent.
The Nifty IT and Nifty Auto indices fell by 1.23 percent and 0.83 percent, respectively, reflecting low investor sentiment across the country.
Inflation provides a Silver Lining
On the positive side, inflation in India in November eased to 5.48 percent, back within the RBI’s target range. However, concerns remain over the strength of the dollar, which may not lead to the benefits of reducing inflation.
Market Outlook
The immediate support for the Nifty is seen at 24,320, while the resistance remains at 24,850. Analysts expect the market to trade within this range in the near term, and buying at lower levels is possible. However, volatility can continue amid global and domestic uncertainty.
