Global stocks rally even as Sensex, Nifty fall sharply on Friday

After five consecutive days of winning streak, Indian equity markets faltered on Friday due to selling pressure in financials. The fall was more or less on expected lines as both the markets had been going up considerably for five straight sessions since last Friday.

As the profit-taking that was due for some time gained momentum today, 30-share BSE Sensex tanked 609 points or 0.82 per cent to settle at 73,730. The NSE Nifty also declined 150 points or 0.67 per cent to 22,420.

"Relief from Middle East tensions, coupled with a correction in oil prices, and a bolstered Indian economic outlook fuelled by elevated composite PMI data from manufacturing and service sectors, propelled a market rally. However, the unexpected decline in US GDP and a surge in the US core PCE parice index triggered a global stock market downturn on the last trading day," explained Vinod Nair, Head of Research, Geojit Financial Services.

Many traders pointed at rising global crude prices, a depreciating ru pee and persistent foreign fund outflows for the bear's grip on Friday. However, globally, the story seemed quite contrasting.

Global stocks rally

Global stock markets rallied on Friday as tech giants lifted Wall Street shares, and the yen sank to its lowest level in 34 years following the Bank of Japan's decision to maintain loose monetary policy.

MSCI's global stock index surged by 0.98%, driven by optimism in the tech sector. With 1.2% higher closing, Europe's benchmark index recorded its largest single-day gain in over three months, driven by gains in banking and industrial sectors. In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled in the positive territory.

In the U.S., the Dow Jones Industrial Average climbed 0.54%, the S&P 500 rose 1.11%, and the Nasdaq Composite surged 1.98%. The US investors seemed to have digested the new inflation data while cheering the robust earnings from mega-cap tech titans Microsoft and Alphabet. Personal consumption expenditures data showed showed an uptick of 2.8% versus estimates of 2.7%.

"The market has been too optimistic about the speed and quantity of rate cuts and these high levels of inflation make it very difficult to justify an interest rate cut anytime soon," said Clark Bellin, president and CIO of Bellwether Wealth.

As concerns linger about world equities ending the month lower amid diminishing hopes for rapid Federal Reserve rate cuts, the yen's volatility has also persisted. Overall, while markets showed signs of recovery, ongoing uncertainties regarding monetary policy and inflation dynamics continue to influence investor sentiment worldwide.

Major Indian stock updates

Bajaj Finance was the biggest drag on the Sensex chart on Friday, skidding nearly 8 per cent after the company's March quarter earnings failed to cheer investors. Bajaj Finserv also declined over 3 per cent. IndusInd Bank, Nestle, Kotak Mahindra Bank and Mahindra & Mahindra were among the other laggards.

Meanwhile, Tech Mahindra jumped over 7 per cent after the IT services company's CEO outlined an ambitious three-year roadmap to accelerate revenue growth and lift margins. Wipro, ITC, UltraTech Cement, Titan and Axis Bank were among the gainers. Within the broader market, Public Sector Undertaking (PSU) stocks emerged as the winners, with HUDCO rising by almost 12 per cent, NLC India by 7 per cent, Engineers India by 6 per cent, and CONCOR advancing by 6 per cent.

"Correction is also attributed to global factors after the Japanese Yen fell to a new 34-year low and disappointing US data pushed its benchmark yields to over 4.7 per cent, thus worsening hopes of an interest rate cut in the medium term," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

Global oil benchmark Brent crude climbed 0.31 per cent to USD 89.29 a barrel. The rupee declined 7 paise to close at 83.35 (provisional) against the US dollar on Friday.

(With inputs from PTI and IANS)