Mumbai: The equity markets plunged sharply on Friday to a 13-month-low amidst sharp weakness in global stocks as investors turned cautious ahead of the release of US jobs report later in the day.
Investors were worried about a strong growth in US jobs data, which could raise the prospects of a rate hike by the US Federal Reserve — a move that trigger more outflow of funds from emerging markets.
The Sensex opened the day on a negative note and plunged sharply by over 600 points in the intra-day trade and the ended the day at 25,201.90, losing 562.88 points or 2.18 per cent. The broader 50-share Nifty slumped 167.95 points or 2.15 per cent to end the trading session at 7,655.05.
According to the provisional data released by the stock exchanges, foreign portfolio investors sold shares worth Rs 1,287.12 crore. “Currently, the markets are getting influenced by global factors like the fear of a rate hike in the US and China’s slowdown. A major portion of the selling, which is happening at the moment are in the anticipation of a rate hike by the US Fed. If the rate hike materialises, further outflow of funds from emerging markets would all depend on US Fed’s statement on the frequency and quantum of interest rate hike goi-ng forward,” said Rikesh Parikh, vice-president, market strategy at Motilal Oswal Financial Services.
India’s volatility index (VIX), which measures investors expectation about the near term volatility jumped 9.57 per cent on Friday suggesting traders have aggressively purchased Nifty options contracts as a hedge against any unexpected fall in the market. The broader markets also remained weak with 2,157 stocks traded on the BSE closing in the red as compared to 541 stocks that advanced.
