Mumbai: Indian equity benchmarks closed down over 1 per cent on Friday amid an extremely choppy session. The 30-share BSE Sensex plunged 199.09 points or 1.22 per cent, to close at 16,162.06, after seeing a swing of 316 points intra-day. The 50-share NSE Nifty dropped 55.90 points or 1.14 per cent, to end at 4,867.75. Reliance industries, with a fall of over two per cent, was the chief contributor to volatility.
On a weekly basis, the cut is deeper at 4.6 per cent; bulk of the fall came in on Thursday when the Sensex fell over 700 points. Indices tried a couple of times to get back into the green, but gave in due to sell-off in private banks, metal, technology and capital goods stocks.
Renewed recession concerns in the US and Europe gripped markets world over in the absence of a co-ordinated action. FOMC disappointed investors on Wednesday by saying, "There are significant downside risks to US economy." Yesterday, US President Barack Obama had urged "coordinated action" to prevent a return to recession.
Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors expects significant volatility over the next two weeks. "We may probably see quantitative easing in six weeks and then markets will start recovering by the year end. But for now the picture is volatile," he told CNBC-TV18 in an exclusive interview.
"Once this volatility subsides, we expect fund flows into emerging markets, where valuations look quite attractive," added.
European markets like France's CAC, Germany's DAX and Britain's FTSE were also down 1-2 per cent amid volatility. The Dow Jones futures fell more than 1 per cent.
A major reason for the weakness in the equity markets is the negative news flow emerging from Europe, mainly Greece. According to Silvio Peruzzo, the Europe economist at RBS, the deteriorating growth outlook in the European region is going to weigh heavily on Greece. "We think that at this stage, the risk of a default is clearly running very high moving towards the end of the year," he said. In terms of triggers, Peruzzo believes the European Central Bank meet in October is an event to look forward to.
On the home turf, the Indian rupee too has seen huge volatility. It appreciated in the second half of trade to 49.15, though in the morning trade, it depreciated to 49.77 per dollar.
On the sectoral front, the BSE Metal, Capital Goods, Auto, Bank and Oil & Gas indices slipped 1-2 per cent.
From the financial space, HDFC, HDFC Bank, ICICI Bank and Axis Bank tumbled 2-3.4 per cent while SBI gained 0.66 per cent.
Metal space too lost its shine; SAIL, Hindalco, Tata Steel and Sesa Goa were down two-four per cent. Sterlite Industries was down 1.7 per cent and JSPL down 1.4 per cent.
Heavyweights Reliance Industries and L&T closed two per cent lower each. Tata Motors was the biggest loser in late trade - crashed five per cent.
However, NTPC, Bharti Airtel and Jaiprakash Associates ended with moderate gains.
Cipla and Tata Power were up one-two per cent. Reliance Power was the top gainer on Nifty - rallied four per cent.
About 400 shares advanced as against 1045 shares declined on the NSE. Volume was quite high as compared to previous day - total traded turnover was nearly Rs 2.15 lakh crore.
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