Markets snap three-week winning streak as NIFTY50 and SENSEX close over 1.4% lower; here's why

Indian benchmark indices opened on a negative note owing to a gap-down opening. However, the benchmark indices tried to recover, but couldn’t sustain at higher levels amid selling pressure. The NIFTY50 extended its fall for a third consecutive day to end at 24,852 level, down by 1.17%. SENSEX ended the day with a decline of over 1,000 points to close at the 81,183 mark.

More importantly, India VIX gained about 7.11%, closing higher at the 15.21 mark. The broader indices also declined with the Nifty Smallcap 100 index closing down over 1.25%, and the Nifty Midcap 100 falling over 1.50%.

On a weekly basis, the NIFTY50 declined by 1.52% over last week and SENSEX slipped over 1.40%

Key reasons for correction in the markets this week

US markets witnessed heavy selling pressure throughout this week as recession fears sent jitters to the market. In addition, job openings edged lower than market expectations to 7.67 million in July from a downwardly revised 7.91 million in June.

Apart from global factors, key domestic macroeconomic indicators also impacted market sentiment throughout the week. The economic growth of India slowed to a 15-month low of 6.7% Q1 FY25, mainly due to poor performance of the agriculture and services sectors.

Lastly, the output of eight core industries slowed down to 6.1% in July 2024 from 8.5% in the same period last year due to a decline in the output of crude oil and natural gas.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) eased to 57.5 in August 2024 as against 58.1 in July 2024, indicating slowing manufacturing activity in the economy.

Collectively, global and domestic factors made investor sentiments turn cautious from optimistic, leading to selling pressure in Indian markets as well.

Top Gainers & Losers

Index Movers

Coming to the NIFTY50 index pullers and draggers, Bajaj Finance (+4.39 pts), Asian Paints (+2.87 pts), JSW Steel (+1.19 pts), Sun Pharma (+0.77 pts), and LTI Mindtree (+0.46 pts) were the pullers of the day. Draggers included ICICI Bank (-42.04 pts), Reliance (-41.96 pts), SBI (-30.16 pts), Infosys (-23.74 pts), and ITC (-18.23 pts).

Broader indices

Today, the broader markets ended the day in red. The Nifty Midcap 100 declined by -1.59%, and the Nifty Smallcap 100 index closed down by -1.25%. Market breadth was weak on Friday as the declining stocks outnumbered the advancing stocks.

Sectoral Indices

On Friday, all of the sectoral indices closed the day on a negative note. The top three losers were Nifty PSU Bank (-3.57%), Nifty Oil & Gas (-2.16%), and Nifty Bank (-1.74%).

Asian Markets

The key Asian indices closed on a negative note today. Japan’s Nikkei 225 slipped -0.62%, the Kospi fell by -1.21%, the Shanghai index declined by -0.81%, while the Hang Seng index closed flat.

As of 4:00 PM, The Dow Jones futures were trading down by -129 points at 40,700.