Off highs: Indices settle lower after 8 days of rally, Sensex sheds 416 pts

Benchmark equity indices closed lower on Friday after 8 days of non-stop rally, as the spectre of recession came back to spook investors, who got busy securing profits ahead of US payrolls data in the anticipation of more cues
on a shift in the Federal Reserve's rate-hike plans.

The 30-share Sensex ended 416 points lower at 62,868 dragged by auto, banking and financial stocks, while its broader peer Nifty 50 ended below 18,700 level.

“The rally in the domestic market was halted by negative cues from global counterparts and broad-based profit booking in large caps. The correction in the market was led by auto stocks as the sales data came in lower than expected due to weaker exports and sequential de-stocking,” Vinod Nair, Head of Research at Geojit Financial Services, said.

“Declining manufacturing activity in the US is proof that the central bank’s policy tightening has started to show results, which in turn will encourage the Fed to keep rate hikes at bay,” Nair said.

Among Sensex stocks, M&M, HUL, Maruti, Nestle, HDFC, Asian Paints and Bajaj Finance were the top losers, falling about 1-2%. Power Grid, ICICI Bank, Sun Pharma, TCS, Infosys and HDFC Bank also closed with cuts.

On the other hand, Dr Reddy’s Labs, Tata Steel, Tech Mahindra, IndusInd Bank, HCL Tech and Bharti Airtel closed with gains.

Sectorally, the Nifty Auto fell 1.10% and Nifty Financial Services plunged 0.62 %. Nifty Bank and Nifty FMCG also closed lower. However, the broader market outperformed the benchmark indices – Nifty Midcap50 advanced 0.69% and Smallcap50 increased 0.72%.

"With IT stocks supporting the Bulls well this week, today we witnessed price action across select themes in the Small & Midcap spaces. On a day when auto stocks dragged indices down post the monthly numbers, the Street focused attention in the broader markets to segments like tyres, pipes & sugar buoyed by positive newsflow as many stocks were keenly sought after in these pockets," S Ranganathan, Head of Research at LKP Securities, said.

Earlier in Asian markets, Japan’s Nikkei 225 fell 1.59%, China’s Shanghai Composite dropped 0.29% and South Korea’s Kospi declined 1.84%.

The rupee inched down on Friday due to persistent demand for the dollar from corporates, traders. The Indian currency ended at 81.31 per dollar, against its previous close of 81.20.

The market breadth was skewed in favour of bulls. About 2,034 stocks gained, 1,451 declined and 136 remained unchanged.

“Gains over the past few days are being digested and markets are looking at fresh data points to decide the further direction. Realty stocks performed well in India due to a broker upgrade. Auto stocks came under profit taking post the monthly sales numbers. Nifty could face resistance in the 18,758-18,888 band while 18,462-18,529 band could offer support in the near term,” Deepak Jasani, Head of Retail Research at HDFC Securities, said.