Markets succumb to profit booking at higher levels

MUMBAI: Weak global cues and profit booking in domestic equities dragged the key indices down on Friday. Nifty opened lower and remained in negative territory throughout the session to close near the day’s low with a loss of 166 points (-0.8 per cent) at 19,332 levels.

Siddhartha Khemka, Head-Retail Research, Motilal Oswal Financial Services, said the broader market too ended in red with the Nifty mid-cap 100 down by 0.8 per cent while the Nifty small-cap 100 was down 0.4 per cent.

Except for PSU bank and auto, all sectors ended in red. FMCG, realty and private banks were among the top losers, he added.

Globally, sentiments turned sour after strong US private jobs data raised the probability of interest rate hikes by the Fed in its upcoming meeting.

On the domestic front, markets are witnessing profit booking at a higher level after seeing a run-up of more than 4 per cent in the last eight trading sessions, he said.

Joseph Thomas, Head of Research, Emkay Wealth Management, said the markets after a big leap in the last few weeks have turned a bit weary of the heights and moved lower by the end of the week. The data points emerging from the US giving stronger indications of a likely rate action from the Fed in its next meeting led to a slump in the overseas markets on Thursday.

There is a narrative that is emerging that inflation might be more persistent than it is thought to be at this juncture, going by the conditions that prevail in the US as also Europe, and the consequent rate action will be north-bound. This will have its impact causing some turbulence in the immediate term, he added.

Vinod Nair, Head of Research at Geojit Financial Services, said the domestic market succumbed to profit-booking as heat waves from weak global markets hit the shore.

Global equities declined due to a spike in US bond yields, fuelled by expectations of a prolonged high-interest rate environment following a sharp increase in US private payroll data. Investors are eagerly awaiting the release of key US non-farm payroll and unemployment data today, which will provide further clues on the Fed's policy direction ahead of its July meeting.