India’s leading equity benchmarks fell nearly 1%, their biggest single-day drop since mid-April — after briefly touching fresh all-time highs in Friday’s trading — dragged down by heavyweight financials, technology, consumer staples and utilities.
The Sensex declined 505.19 points or 0.77% to settle at 65,280.45. The index made a fresh high of 65,898.98, beating Thursday’s high of 65,832.98. The Nifty topped 19,523.60 in the opening hour of Friday’s trading but closed at 19,331.80, down 165.50 points or 0.85% from the previous close.
“I am surprised our markets have been complacent with the events happening globally,” said Andrew Holland, CEO, Avendus Alternate Strategies LLP. “My concern is the US Fed will keep raising rates. But our markets look overbought at the moment after the recent rally and could see a correction.”
Holland said depreciating currencies in China and Japan may further exacerbate worries of a global recession emanating from the West, and even if India’s fundamentals look strong, local shares may experience a bumpy ride on their journey to new highs. “There will be hiccups along the way,” Holland said.
Major indices in the Asia-Pacific region extended losses for the second consecutive session as Wall Street sold off overnight after payroll processing firm ADP Research Institute reported private sector jobs surged by 497,000 in June – the biggest monthly rise since July 2022 and nearly twice what economists had predicted.
On Friday, official data showed that the US added fewer jobs than anticipated in June.
US, Europe Markets
However, still-strong wage growth and a slight drop in the unemployment rate is likely to keep the Fed on track to raise rates at the upcoming July meeting.
The 209,000 payroll jobs added in June continued a steady climb down in the pace of hiring from the highs seen in the months when the economy was still reopening from the pandemic
The two-year US Treasury yield had surged by nearly 4 basis points (bps) to 4.987% on Thursday. The yield hit a high of 5.120%, a level last seen in June 2007, when it reached 5.121%.
“Whether it’s that big of a number” as what the ADP report suggested “or even half of that, it would still be showing that the labour market is very strong and the Fed has not done enough to get inflation down,” said Megan Horneman, chief investment officer, Verdence Capital Advisors before the official data was released.
