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Mumbai: Stock markets declined in early trade on Friday after a record-breaking rally in the previous trade as investors went in for profit-taking amid weak trends from Asian markets. The hotter-than-expected US inflation data also hit investors' sentiment as it reduced hopes of rate cuts by the Federal Reserve. The 30-share BSE Sensex declined 324.12 points to 74,714.03. The NSE Nifty dipped 96.6 points to 22,657.20.
From the Sensex basket, JSW Steel, Maruti, Asian Paints, ITC, Kotak Mahindra Bank and HDFC Bank were the major laggards. NTPC, Tata Motors, Larsen & Toubro and Nestle were among the gainers. In Asian markets, Tokyo traded in the positive territory while Seoul, Shanghai and Hong Kong quoted lower. Wall Street ended mostly with gains on Thursday.
"The hotter-than-expected US inflation has spiked the US bond yields. This is negative for FPI inflows but is unlikely to impact the Indian market which is resilient, and the rally is driven mainly by domestic liquidity," said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
From the global equity market perspective, sticky US inflation is a negative since it has reduced hopes of three rate cuts by the US, he added. "But it is important to note that there is a real positive factor in the sticky inflation, and that is the exceptionally strong US economy which is showing no signs of a slowdown, leave alone recession. This resilience of the US economy will support earnings growth and, therefore, the US stock market. This favourable backdrop will be positive for other markets, including India," Vijayakumar said.
Global oil benchmark Brent crude climbed 0.58 per cent to USD 90.26 a barrel. Foreign Institutional Investors (FIIs) bought equities worth Rs 2,778.17 crore on Wednesday, according to exchange data.
"Market sentiments were shaken by the US CPI inflation data, questioning the Fed's rate-cut plans and prompting a bearish outlook on potential rate cuts for 2024," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
Despite this, hopes for robust Q4 corporate earnings and a pre-election rally remain positive catalysts, as reflected in net buying by both FIIs and DIIs, he added.
The BSE benchmark climbed 354.45 points or 0.47 per cent to settle at an all-time high of 75,038.15 on Wednesday. The Nifty advanced by 111.05 points or 0.49 per cent to reach a record closing peak of 22,753.80. During the day, it jumped 132.95 points or 0.58 per cent to hit a lifetime intra-day peak of 22,775.70. Stock markets were closed on Thursday on account of Eid-Ul-Fitr.
