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Fears over a slowdown in global growth on the back of US-China trade tensions, along with domestic concerns on lower industrial production, spooked investors and led the key Indian equity indices to a negative weekly close.
Even a rebound on Friday triggered by signs of an ease in US-China trade tension as reports said that a US delegation will visit China next week to participate in trade talks failed to enthuse.
Index-wise, the S&P BSE Sensex lost 381.62 points, or 1.05 per cent, to close at 35,695.10, whereas the 50-share Nifty of the NSE declined by 132.55 points, or 1.22 per cent, to settle at 10,727.35.
In the just-concluded week, global markets witnessed volatile trade due to weak US economic data which added to fears of a global slowdown.
The fears over the global slowdown were again supplemented by data showing a contraction in China's factory activity. Additionally a lowered financial forecast by tech major Apple subdued investor sentiments.
On the domestic front, data showing the Indian manufacturing activity expanded at a slower pace in December acted as a dampener.
"Back at home, the domestic market looked cautious driven by concerns about a global growth slowdown, amid news reports that the government is planning a massive farm relief package that may further worsen the fiscal health of the economy," SMC Investments & Advisors CMD D.K. Aggarwal said.
Besides, the Indian markets were dented by an outflow of foreign funds, as FIIs sold shares worth over Rs 2,000 crore as against domestic institutional investors, who bought over Rs 500 crore worth of stocks, provisional data on BSE showed.
In contrast, the local currency strengthened by 43 paise to 69.72 against the US dollar from its previous week's close of 70.15.
"The rupee closed the week stronger... which was a bit surprising on the back of crude moving up by 15 per cent in last week from lows of around $50," said Sajal Gupta, Edelweiss Securities' Head of Forex and Rates.
On sector-specific levels, PSU banks, realty and Bank Nifty led the gains this week on the indices, while auto, metal and energy indices dragged.
Stock-wise, the realty sector outperformed the benchmark indices during the volatile week, partly on the expectation that the GST Council at its January 10 meeting will slash tax rate on under-construction housing to 5 per cent from 12 per cent.
"The market breadth was negative in three out of the five trading sessions of the week. The top sectoral gainers for the week were the PSU Banks, realty and Bank Nifty indices. The top losers were the auto, metal and energy indices," Deepak Jasani of HDFC Securities said.
The top gainers on the BSE and the NSE were Yes Bank which gained 4.38 per cent and Bharti Airtel which was up 2.02 per cent. Sun Pharma, Asian Paints and ICICI Bank gained in the range up to 2 per cent.
In contrast, export-oriented Mahindra & Mahindra lost heavily this week after lower than expected sales figures dragged its shares down 9.59 per cent.
Tata Steel lost 5.06 per cent followed by Hero MotoCorp, which slid by 4.40 per cent, and Maruti Suzuki which declined by 3.46 per cent.
(Ravi Dutta Mishra can be reached at email@example.com and Rohit Vaid at firstname.lastname@example.org)