Indices log biggest 1-day fall in 9 mths; Sensex sinks 1,939 points, holds 49K
A steep hike in US treasury yields took the global markets by surprise on Friday as investors dumped equities for bonds. That apart, an air strike by the United States in Syria on Thursday, targeting facilities near the Iraqi border, further dented trading sentiment.
US Treasury yields vaulted to their highest levels, of about 1.5 per cent, since the outbreak of the coronavirus pandemic on expectations of a strong economic expansion and related inflation. Back home, the 10-year goverment bond firmed up to 6.23 per cent on Friday mirrowing similar trends. Effectively, fear of reversal in rate cut cycle, spooked investors who off-loaded equities worth Rs 5 trillion.
Additionally, the US air strike in retaliation for a rocket attack in Iraq earlier this month, and caution ahead of the release of the gross domestic product (GDP) for the December quarter made investors sit on the fence.
In the intra-day trade, the benchmark S&P BSE Sensex tumbled 2,149 points while the Nifty50 index slumped 629 points. The indices ended near the lowest point of the day, at 49,100 and 14,529 levels, respectively, down 1,939 points and 568 points.
All the 30 constituents on the Sensex index and 50 stocks on the Nifty ended the day in the red. ONGC, JSW Steel, GAIL, M&M, Bajaj Finance, Grasim, and Hero MotoCorp were the top Nifty losers, down up to 8 per cent; Axis Bank, HDFC, Power Grid, ICICI Bank, and HDFC Bank were the top drags on the Sensex.
In the broader markets, small-cap stocks held their ground relatively better as the S&P BSE SmallCap index settled only 0.7 per cent down. The S&P BSE MidCap index, on the the hand, ended 1.75 per cent lower.
On the sectoral front, banking counters got butchered as yield concerns soured sentiment in the sector. Expectations that banks may have to show yield-induced fall in G-sec value as losses, investors pushed the sell button for banks. The Nifty Bank, and Private bank indices closed 5 per cent down, followed by losses in the Nifty PSU Bank index, down 4.5 per cent.
The Nifty Metal and Auto indices dropped 3 per cent while the Nifty FMCG, IT, and Pharma indices slipped 2 per cent each.