The Indian benchmark indices, the BSE Sensex and the NSE Nifty, continued their losing streak for the fourth session on Friday amid sell-off in global equities in anticipation of interest rate hikes by the US Federal Reserve. On Friday, the 30-share BSE Sensex dropped 427 points or 0.72% to close at 59037, while the broader NSE Nifty settled 139 points or 0.79% lower at 17,617. The top five losers on the Sensex pack were Bajaj Finserv, Tech Mahindra, Tata Steel, Bharti Airtel, and IndusInd Bank, which declined in the range of 2.8% to 5.4%.

The BSE Sensex has plunged 2,271 points over the last four sessions, while the Nifty50 declined 689 points during this period. Investors were left poorer by ₹10.17 lakh crore in a four-day share fall on Dalal Street, with the market capitalisation (m-cap) of BSE-listed companies slipping to ₹ 269.85 lakh crore from Monday's ₹280 lakh crore mark.

The prospects of tightening monetary policy in wake of rising bond yields and record surge in crude price as well as concerns about the raging spread of the coronavirus omicron variant across the globe trigged a sharp correction in equities in recent days. Adding to it, sustained selling by foreign investors amid uncertainties regarding the upcoming budget also injected volatility in the market.

''The ongoing selling by FIIs and weak Indian rupee forced the domestic market to continue surrendering its gains, with all major sectors trading under pressure. Weak sentiments from global markets due to persistent inflationary worries and weaker-than-expected earnings also added to the selling pressure, says Vinod Nair, Head of Research at Geojit Financial Services.

Going ahead, global disturbances and the uncertainties regarding Budget 2022 will likely keep the domestic market highly volatile in the coming days, he added.

Here are the key five factors that triggered sharp sell-off in equities in last four sessions.

Weak global cues

The sustained selling in the U.S. stocks dragged Asian stocks lower. In the overnight trade, U.S. stocks finished lower for the third straight session on Thursday amid looming fear that the Federal Reserve will aggressively move to raise rates this year.

On Wall Street, the Dow Jones Industrial Average fell 0.89%, the S&P 500 dropped 1.10% and the NASDAQ Composite ended 1.30% lower.

Shares in the Asia-Pacific region followed Wall Street lower on Friday, with all major markets settling in negative terrain. Australia’s ASX 200 index was the worst performer in the region by ending 2.3% lower, followed by Taiwan Weighted Index, which plunged 1.75%.

Japan’s Nikkei 225 index dropped 0.9%, while South Korea’s KOSPI ended 1% lower. In mainland China, Shanghai Composite and Shenzhen Component tumbled 0.9% and 1.2%, respectively.

Meanwhile, European stocks also extended their losing streak on Friday, following weak cues from Wall Street as investors weighed the rise in the U.S. bond yields and crude prices. Germany’s DAX plummeted 1.5% in early trade, while France’s CAC index slipped 1.2%. In a similar trend, the U.K.’s FTSE 100 index fell 0.75% in early deals.

Continued rise in Covid-19 cases

The concerns about the fast spread of the coronavirus omicron variant in the country also weighed on investor sentiments.

The number of Omicron cases rose to 9,692, while the total number of coronavirus infections in the country increased to 3,47,254, according to the latest data released by the Union health ministry on Friday. Meanwhile, the death toll rose by 703 in the last 24 hours.

As per the government data, the active cases now comprise 5.23% of the total infections, while the recovery rate slipped to 93.50%. The daily positivity rate increased from 16.41% to 17.94%.

Profit booking ahead of Budget

With little over one week left for the Union Budget 2022, investors resorted to profit booking to take advantage of the recent rally in the stock market. Adding to it, sustained selling by foreign investors amid the uncertainties regarding upcoming budget also triggered sell-off in the market.

Finance Minister Nirmala Sitharaman will present the Union Budget for the financial year 2022-23 on 1 February at 11 am.

Record rise in crude prices

The record rally in global crude prices also weighed on Indian equities. Investors fear that a spike in oil price could lead to rise in inflationary pressures which may prompt the Reserve Bank of India to reassess its stance over key policy rates.

Brent crude crossed the $88 a barrel-mark earlier this week, hitting its highest level in seven years, amid escalating global political tensions. Investors fear that rising tensions in the Middle East and the Russia-West standoff over Ukraine could worsen the already tight supply outlook.

Spike in bond yields:

The sustained rise in bond yields globally also injected negativity in the market. The continuous spurt in bond yields reignited fear of interest rate hikes by the U.S. Federal Reserve by March 2022. Investors will keep a close eye on the U.S. central bank's policy meeting next week to see how it will tame inflation.

On Wednesday, the 10-year Treasury yield in the US surged to 1.9%, its highest level since December 2019, which triggered a sell-off in global equities.

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