Dalal Street tanked nearly 1% in early trade as benchmark indices opened sharply lower on Friday, snapping a five-session winning streak, as a brutal selloff in information technology stocks overshadowed the positive impact of falling crude oil prices and improving domestic market fundamentals.
The S&P BSE plunged 724.34 points, or 0.94%, to 76,685.64 in early trade, while the NSE Nifty50 fell 201.70 points, or 0.83%, to 23,966.30, slipping below the psychologically important 24,000 mark as of 9:25 am.
The decline comes after a strong rally that saw the Sensex gain nearly 4.8% and the Nifty rise over 4.3% in the previous five sessions, driven by easing geopolitical tensions and lower crude oil prices.
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Infosys tumbled 7.84%, making it the biggest loser on the Sensex. dropped 5.91%, Tech Mahindra fell 5.51% and HCLTech declined 5.13%.
The weakness in technology stocks spilled over to the broader market and erased gains in several sectors.
IT stocks witnessed heavy selling on Friday after Accenture’s latest earnings commentary raised fresh concerns about the outlook for technology spending, triggering one of the sharpest declines in the sector in recent months.
The market fall is notable because it comes despite several supportive factors.
Crude oil prices remain near multi-month lows after the US-Iran peace agreement, easing concerns over inflation and India’s current account deficit. Foreign investor selling has also slowed considerably in recent sessions, while banking stocks have been witnessing short-covering-led gains.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the market continues to enjoy support from improving macroeconomic conditions.
“The significant near-term trends in the market are underlying strength emanating from improving macros helped by the sharp correction in crude prices, short covering by FIIs supporting recovery in banking stocks, and tapering FII selling,” he said.
While IT stocks came under pressure, some pockets of the market remained resilient.
NTPC rose 1.01%, Sun Pharma gained 0.60%, Power Grid added 0.49%, Trent climbed 0.42% and Bharti Airtel advanced 0.42%.
Reliance Industries also traded in positive territory ahead of its closely watched AGM later in the day, where investors are expected to watch for announcements related to the company’s new energy business and a possible Jio IPO timeline.
Apart from the IT selloff, investors will keep a close eye on
According to Vijayakumar, announcements regarding Reliance’s new energy plans and developments related to the long-awaited Jio IPO could influence market sentiment later in the day.
Despite Friday’s decline, analysts believe the broader market structure remains constructive, with lower oil prices, a stable rupee and easing FII outflows continuing to support sentiment.
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