Indian shares drop on US economic concerns, FII outflows

Bengaluru: The benchmark Indian indices fell more than 1per cent each and investors lost nearly Rs 5.5 lakh crore on the Bombay Stock Exchange as the markets faced a massive correction on nervousness ahead of fresh US economic data and  foreign fund outflows due to Sebi’s deadline over foreign institutional investor disclosure norms.

BSE SENSEX.

Falling for the third day running, the 30-share BSE Sensex dropped 1,017.23 points or 1.24 per cent to settle at 81,183.93. During the day, it had fallen 1.48 per cent. Meanwhile, the NSE Nifty50 dropped 292.95 points or 1.17 per cent to close at 24,852.15.

NSE NIFTY.

This week was the worst for Indian markets in three months, as per news agency Reuters.

"The domestic market was in panic today due to the Sebi's deadline over FIIs disclosure norm, however this is not expected to impact India’s lucrativeness to FIIs in the long-term.  Coupled with lack of new market catalysts and elevated valuations, a muted trend is expected to continue in the short-term,” said Vinod Nair, Head of Research, Geojit Financial Services.

Nair said that global markets were also adopting a cautious stance ahead of the release of the US non-farm payroll data. Additionally, the continuous decline in oil prices to a 14-month low and weak job openings data are heightening fears of a slowdown in the US in the near term, he said.

After close of Indian markets, data from United States showed that unemployment rate for August stood at 4.2 per cent, slightly better than estimates. This will determine the speed and size of the Federal Reserve’s planned interest rate cuts.

“The domestic markets touched record highs at the start of the week and subsequently ended the winning streak as the week progressed. From a global perspective the focus is now on the economic data coming from the US to gauge the direction and the quantum of Fed Fund Rate movement in the upcoming meet,” said Joseph Thomas, Head of Research, Emkay Wealth Management.

Among the 30 Sensex firms, State Bank of India tanked around 4.5 per cent after Goldman Sachs downgraded the stock to "sell" from "neutral", citing rising headwinds to growth, margins and credit costs.

ICICI Bank, NTPC, HCL Technologies, Reliance Industries, Tata Motors, ITC, Axis Bank and Adani Ports were the other major laggards. The sell-off was broad-based, with the banking and energy sectors taking the biggest hit.

In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled lower. European markets were trading in the red. The US markets ended mostly in the negative territory on Thursday.