Indian equity benchmarks plunged on Friday, stalling an eight-day bull run and a record-breaking closing streak of six straight days as investors took a breather and secured profits ahead of key US jobs report, which could give clues on the Federal Reserve's tapering of its aggressive rate hikes plan.
The BSE Sensex index fell 415.69 points, or 0.66 per cent, to close at 62,868.50, and the broader NSE Nifty index declined 116.40 points, or 0.62 per cent, to end at 18,696.10.
Still, the Nifty has risen 3.6 per cent over the last eight sessions and ended Friday with gains for a second straight week.
"Nifty futures outperformed their global peers and tested close to 19,000 levels this week. However, in the short term, it is showing clear signs of exhaustion, with laggard sectors like IT now moving up and banks underperforming," said Rudra Murthy BV, Research Head at Vachana Investments.
"Expect markets to see some profit booking in the coming week. The Nifty can test 18,400 to 18,600 support zones before the next big move. The local trigger comes from Gujarat election results which will be out on December 8th."
Both benchmarks recorded eight consecutive days of advances when they ended at a record high the previous session, marking the sixth straight day of an all-time high close.
The Sensex and Nifty have closed at new highs each day since the record-breaking binge began on Friday last week.
Despite Foreign Institutional Investors (FIIs) selling shares worth 1,565.93 crore on Thursday, turning a profit, capital inflows have been strong in November as the Federal Reserve has hinted at slowing the pace of its brisk rate hikes.
But the bulls were tempered on Friday ahead of US non-farm payrolls data, scheduled to be released later in the day after Wall Street equities closed mostly lower overnight on Thursday.
"Investors are booking some profits after the recent run-up. At higher valuations, there is a shift happening from expensive stocks to value stocks," said Anita Gandhi, Director at Arihant Capital Markets.
As traders awaited the monthly US jobs data for hints on the Federal Reserve's upcoming policy moves, global equities were on the defensive on Friday, stabilising after recent big gains.
Following two days of gains that left it on course for a seven-week winning streak, Europe's Stoxx 600 index opened down, while futures for the S&P 500 and Nasdaq 100 declined.
A measure of Asian shares fell for the first time in four days, with Japan leading the way as the five-day surge in the yen boosted pressure on stocks to decline.
"Consensus is that recession is coming, but equities cannot bottom before it starts, inflation won't fall quickly so central banks can't blink, China reopening will be a messy process, and Europe remains tricky," Barclays Plc Strategist Emmanuel Cau noted.
Concerns about a recession have increased after data released on Thursday showed a decline in global factory activity in November, with American manufacturing declining for the first time since May 2020.
The time has come to scale back rate increases, according to Fed Chair Jerome Powell, who noted that "slowing down at this point is a good way to balance the risks."
Because US data reached a deflationary point in addition to Mr Powell's overall dovish remarks over the past few days, Commerzbank analysts concluded that there was ample justification for pricing out aggressive rate hikes.
Meanwhile, the Chinese yuan rose and was set for its biggest weekly gain since China revalued the currency in 2005, boosted by expectations of an exit from China's zero-COVID policy and a slower pace of interest rate hikes from the Fed.