Benchmark equity indices, Sensex and Nifty, declined in early trade on Friday after a three-day rally, dragged by heavy selling pressure in IT stocks and sharp swings in gold and silver prices amid a volatile geopolitical scenario.
Ahead of the Budget presentation on February 1, investor sentiment remained cautious while fresh fund outflows and weak trends in global equities added to markets’ weakness in early trade.
The Nifty 50 index opened at 25,247.55, slipping 171.35 points or 0.67 per cent, while the BSE Sensex began the session at 81,950.05, down 616.32 points or 0.75 per cent.
The 30-share BSE Sensex then tumbled 619.06 points to 81,947.31, while the 50-share NSE Nifty dropped 171.35 points to 25,247.55.
Ajay Bagga, Banking and Market Expert, said the “Thursday Rollercoaster” of “flash crashes” and “V-shaped recoveries” was responsible for the decline on Friday.
“Gold and Silver prices plunge 9-12 per cent, then rebound sharply. Comex gold dropped from near USD 5,625 to around USD 5,100 on Thursday, wiping out USD 3.4 trillion in notional value based on global supply, while silver swung wildly from over USD 121 to USD 106.60. Traders cited profit-taking after gold’s 90 per cent yearly surge on geopolitical tensions and central bank buys, and silver’s 270 per cent jump from industrial demand. Prices recovered most losses by close, with gold at USD 5,539 and silver at USD 117; the selloff also hit Bitcoin, stocks, and Microsoft shares, which fell 10 per cent on cloud growth worries,” he said, adding, “The Indian markets are caught between global volatility and the most important domestic week of the year.”
Also Read: Silver, gold futures touch record highs amid robust demand
Broader market indices also remained under pressure, with the Nifty 100 down by 0.3 per cent, while the Nifty Midcap 100 lost 0.67 per cent and the Nifty Smallcap 100 declined by 0.51 per cent.
Sectoral indices on the NSE mostly traded in the red. The Nifty Auto index fell by more than 1 per cent, Nifty FMCG slipped 0.20 per cent, Nifty Metal declined 1.71 per cent, Nifty PSU Bank eased 0.25 per cent, Nifty Media dropped 0.7 per cent, and Nifty Realty lost 0.42 per cent.
In stock-specific moves, Vedanta shares declined nearly 5 per cent at the open, while Hindustan Zinc also fell 5 per cent, reflecting pressure from high global commodity volatility.
On the institutional front, foreign institutional investors net sold equities worth Rs 393 crore on Thursday, while domestic institutional investors provided support with net buying of Rs 2,638 crore.
Gaurav Seth, CEO, 5paisa, said, "The recent depreciation of the Indian Rupee is the result of a combination of global and domestic factors rather than any single trigger. We've seen significant FII outflows from Indian equities over the past several months, which naturally puts pressure on the currency. This has been compounded by geopolitical developments, particularly the sharp increase in US tariffs on Indian exports and the absence of a near-term trade agreement between India and the US".
Asian markets also traded lower, adding to weak sentiment. Japan's Nikkei 225 was down 0.3 per cent, Singapore's Straits Times fell 0.16 per cent, Hong Kong's Hang Seng index dropped 1.73 per cent, and Taiwan's Weighted Index declined 1.15 per cent.
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