Bear hug: Sensex, Nifty end at new 13-month lows; indices mark biggest weekly loss in 4 years

Wide-spread selling on Dalal Street continued unabated as bears were back in action after a day’s break, overpowering the bulls in four out of the five trading sessions this week. Negative bias across the global equities pummeled stocks across-the-board here, as investors fretted ahead of the US jobs data scheduled to be announced later today that point towards healthy non-farm employment readings for last month. Economists polled by Reuters expect the US economy to have produced 220,000 new non-farm jobs in August, continuing the robust employment creation of the past five years, while average hourly earnings are predicted to have risen by a modest 0.2 percent, as they did in July. [caption id=“attachment_2421506” align=“alignleft” width=“380”]  Reuters[/caption] This led to a fear among the investor fraternity that the US Fed’s decision, which has been considering rate hike by this month end or towards the close of this year, could trigger a gush of foreign fund outflows from the emerging markets, including India, resulting in a more severe damage to the already struggling markets. In addition to last month’s record net outflow of over Rs 17,000 crore from domestic equities, foreign institutional investors have already offloaded shares worth Rs 4,385 crore this week, indicating more pain for the markets in the near term. In sync with global markets sell-off, the 30-share BSE S&P Sensex marked a new 13-month low to end at 25,201.90, down 562.88 points, or 2.2 percent from previous close. After a weak opening, the index had plunged deep into the red in late trades to touch the day’s low of 25,119.06, down 646 points. Similarly, the broader 50-stock CNX Nifty also closed lower at 7,655.05, down 167.95 points, or 2.1 percent, its weakest level since August 2014. In the current week, the benchmark plunged 1,190 points, or 4.5 percent down, its biggest weekly loss in nearly four years. While equity markets remained bearish through the week, investors’ wealth was eroded by Rs 4.6 lakh crore during the week. Market breadth ended extremely weak, with 2,116 stocks declining against 574 stocks advances on BSE. Globally, key Asian indices such as Japan’s Nikkei ended 2.1 percent lower, while major European gauges were down over 2 percent ahead of the US employment data. The fall in European markets came despite the ECB’s decision to continue with its bond-buying programme post September 2016. Back home, several frontline shares came under severe pounding. Shares of Vedanta plunged 4.8 percent to Rs 93.30, GAIL slumped 4.7 percent to Rs 280.90, Tata Steel declined 4.6 percent to Rs 218.95, Hindalco fell 4.3 percent to Rs 73.85, Axis Bank lost 3.6 percent to Rs 468.85, Dr Reddy’s eased 3.6 percent to Rs 4,056.15, ICICI Bank shed 3.4 percent to Rs 257.85 and SBI was down 3.2 percent at Rs 225.05. The fall was not restricted to index stocks, as several mid & small-cap shares, too, were engulfed under the broad market sell-off. As a result of the severe bear hammering, the BSE mid-cap index ended 1.9 percent lower and BSE small-cap index closed nearly 2.5 percent down.