Sensex and Nifty closed over a percent lower on September 6, weighed down by banking, energy, and IT stocks. A weak trend in global peers the highly anticipated US job report due to be released later in the day, kept investors cautious. The US jobs data is expected to provide key insights into the Federal Reserve's upcoming policy decisions.
At close, the Sensex was down 1,017 points or 1.2 percent at 81,183 and the Nifty was down 292 points at 24,852. About 1,359 shares advanced, 2,422 shares declined, and 86 shares were unchanged. Nifty 50 fell 1.5 percent this week, marking its worst performance in three months.
"The recent weakness in US markets has stalled the momentum in Indian markets, causing participants to become cautious ahead of the upcoming jobs data," said Ajit Mishra, SVP, Research at Religare Broking.
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A factor that could be worsening the sell-off is news that the market regulator will tighten derivative rules to increase entry barriers, making it expensive to trade, in an attempt to limit retail investors speculating on risky contracts. SEBI will limit the number of options contract expiries to one per exchange a week and nearly triple the minimum trading amount, four sources with direct knowledge of the matter told Moneycontrol.
The Nifty PSU Bank index emerged as the hardest-hit among sectoral indices, falling 3.6 percent, with SBI leading the decline. SBI fell 4.4 percent becoming the worst-hit stock on Nifty 50 after Goldman downgraded the stock to 'Sell' and cut its target price to Rs 742 from Rs 841. BPCL, ICICI Bank, NTPC, and HCL Tech were some of the other losers on Nifty 50.
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In a recent report, Morgan Stanley reviewed domestic IT players and concluded that it's not time for investors to reduce their IT holdings or shift from their 'overweight' stance on IT stocks. The brokerage expects an uptick in BFSI spending to sustain strong growth through FY26. Even this could not the IT index from falling by nearly a percent and dragging Nifty down. The brokerage downgraded HCLTech to 'equal-weight' causing the stock to fall nearly 2 percent.
Shares of oil marketing companies (OMCs) - IOCL, HPCL, and BPCL fell 2-3 percent after a news report said citing sources that the government may consider reducing fuel prices, given the recent fall global crude oil prices.
The broader market was not spared from the sell-off. The BSE Midcap dropped 1.4 percent and the Smallcap index fell by nearly 1 percent. Meanwhile, India VIX, a key indicator of market volatility, surged 6.5 percent and crossed 15 points.
On a positive note, shares of Asian Paints, Bajaj Finance, JSW Steel, Divis Labs, and LTIMindtree rose 0.3-1 percent, emerging as some of the top gainers on the Nifty 50 index.
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