Sensex falls 412 points, Nifty tumbles 129 points due to metal stock slump

The Indian stock market witnessed a sharp decline in early trade on Friday with both benchmark indices ndash the Sensex and Nifty ndash slumping due to a pullback in metal stocks foreign fund outflows and weak global cuesThe 30share BSE Sensex plummeted by 4128 points settling at 8087716 while the NSE Nifty tanked 12985 points to 2441885 in the initial hours of tradeAmong the bluechip stocks of the Sensex metal stocks bore the brunt of the selloff with Tata Steel and JSW Steel registering notable losses Other major laggards included IndusInd Bank Axis Bank Mahindra amp Mahindra Larsen amp Toubro State Bank of India and Reliance Industries On the other hand stocks such as Bharti Airtel Nestle Adani Ports and Hindustan Unilever saw gains during the early trade sessionThe negative sentiment was exacerbated by foreign institutional investors FIIs who offloaded equities worth 356001 crore on Thursday according to exchange data This continued outflow of foreign funds has been a key factor in dragging the market lower Analysts believe that given Indiarsquos high stock valuations FIIs are likely to continue their selling spree especially at every market riseDespite the bearish trend in the market there are some positive factors that may provide support in the near term A key tailwind is the recent decline in Indias retail inflation which fell to 548 per cent in November entering the Reserve Bank of Indiarsquos RBI comfort zone The decline was largely attributed to easing food prices creating potential room for a rate cut at the RBIrsquos ratesetting panel meeting in February under the new leadership of Governor Sanjay MalhotraHowever the countrys industrial production IIP growth showed signs of slowing down with a 35 per cent yearonyear growth in October primarily due to poor performance in sectors like mining power and manufacturing This further dampened investor sentimentCommenting on the market outlook V K Vijayakumar Chief Investment Strategist at Geojit Financial Services mentioned ldquoIn the near term the market faces both a headwind and a tailwind The headwind is the resumed selling by FIIs which sold stocks worth 3560 crore yesterday Given the high valuations FIIs are likely to sell more during every market rise The tailwind supporting the market is the decline in inflationrdquoGlobal markets also contributed to the negative sentiment with Asian indices like Tokyo Shanghai and Hong Kong trading lower while Seoul posted a marginal gain Wall Street had ended in the red the previous day further fuelling concernsIn commodities the global oil benchmark Brent crude slipped by 004 per cent to USD 7338 a barrelOn Thursday the Sensex had fallen by 23618 points or 029 per cent closing at 8128996 The Nifty also closed down by 9310 points or 038 per cent at 2454870 marking a continuation of the downward trend in the stock marketAs per PTI reports the continued volatility in the markets suggests that the upcoming interest rate decision by the Federal Reserve on December 18 could further heighten market uncertainty keeping investors on edgeWith inputs from PTI