Sensex falls 1.2%, Nifty ends below 25,000: What led to the fall in markets?

Domestic benchmark equity indices witnessed heavy selling pressure on Friday, with the Sensex and Nifty falling 1.2 per cent each. The fall in stock market barometers was mainly due to profit booking and caution ahead of the release of US jobs data for August.The market capitalisation, or the total value of all listed shares, of the BSE-listed firms fell by Rs 5.49 lakh crore to Rs 460.18 lakh crore, or $5.48 trillion. ## How much have Sensex and Nifty fallen? The BSE’s 30-share Sensex tanked 1,017.23 points, or 1.24 per cent, to close at 81,183.93. The broader Nifty 50 slipped 292.95 points, or 1.17 per cent, to end at 24.852.15. “Markets witnessed intense profit-booking after the recent upsurge and key benchmark indices crumbled on fears a subdued US economic data could push Fed chairman to postpone rate cut decision,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd. ## What triggered the fall in markets? Investors trimmed their bullish bets ahead of the US jobs report, as any uptick in the numbers could prompt the Fed to maintain the status quo on interest rates. “Indian markets witnessed a surprising decline today after consolidating at all-time highs. One key factor could be weaker job data from the USA, fuelling concerns about a potential global economic slowdown,” said Santosh Meena, Head of Research, Swastika Investmart Ltd. According to Geojit Financial Services Chief Investment Strategist, V K Vijayakumar, there is a consensus that the US Federal Reserve will cut rates in the September meeting but the extent of the cut will be determined by the jobs data. “If the August jobs numbers come lower than market expectations and the unemployment rises higher than market expectations, the Fed may even cut by 50 bps (basis points). But this may not be taken positively by the market,” said Vijayakumar. Softer-than-expected US jobs data in July also resulted in over 2 per cent fall in Sensex and Nifty. The unemployment rate in the US had risen to 4.3 percent in July, and nonfarm payroll employment edged up by 114,000, stoking fear of a deteriorating labor market and a slowdown in the economy. ## What other factors led to heavy selling? “The domestic market was in panic today (on Friday) due to the SEBI’s deadline over FIIs disclosure norm. However, this is not expected to impact India’s lucrativeness to FIIs in the long-term,” said Vinod Nair Head of Research Geojit Financial Services. In August last year, the Securities and Exchange Board of India (Sebi) had asked FPIs, holding more than 50 per cent of their equity AUM in a single corporate group or with an overall holding in Indian equity markets of over Rs 25,000 crore, to disclose granular details of all entities holding any ownership, economic interest, or exercising control in the FPI by end of January 2024. However, Sebi, in January, this year gave FPIs additional seven months to provide additional disclosures. ## Which stocks fell the most? All sectors ended in red with PSU bank and oil and gas declining the most. The Nifty Bank fell 1.74 per cent to close at 50,576.85. Among the NSE companies, the stocks that declined the most included State Bank of India (4.26 per cent), BPCL (2.34 per cent), ICICI Bank (2.14 per cent), NTPC (2.05) and HCL Tech (2.04 per cent). ## How much did FIIs sell? As per the provisional data of BSE, foreign institutional investors (FIIs) sold Rs 620.95 crore of domestic stocks. On the other hand, domestic institutional investors (DIIs) bought Rs 2,121.53 crore worth of shares.