Nifty, Sensex fall as investors wait for key US jobs data

Stock market news: Benchmark indices started the day in the red on Friday as investors remained on the sidelines ahead of a key US jobs report, which may determine whether the Federal Reserve cuts interest rates further.

In comparison, the Nifty 50 index was down 0.32 per cent at 25,065.60 points at 9:45 am, while the S&P BSE Sensex was lower by 0.37 per cent at 81,897.11. This is against a week where the blue-chip index rose to a record high, but is down about 0.5 per cent amid rising worries over the health of the US economy.

Markets are on edge with a chock-full-of-action macro calendar in store for the next couple of weeks, especially with the US jobs report and the FOMC interest rate decision slated on September 18," said Vikram Kasat, Head of Advisory at PL Capital, Prabhudas Lilladher.

Worries of a slowdown in the US labour market have started to resurface after recent data indicated not only a slowdown in the overall number of job openings but also more moderate gains in the private sector. The development has boosted speculation that the Fed will consider a 50-basis-point rate cut at its September 17-18 meeting.

Clearer signals on the health of the labour market will be seen in the US non-farm payroll report for August due after Indian markets close. A weaker than expected report will improve the chances of a 50-bps rate cut, while a stronger report may lead to expectations of a more modest 25-bps cut. Any US rate cuts are expected to spur foreign fund inflows into emerging markets like India.

The early trade was dominated by losers as 10 of the 13 major sectors turned red, while the domestically-focused small-caps jumped 0.4 per cent and mid-caps ended flat.

Individual stocks Aavas Financiers became the biggest gainer, up 3.2 per cent, after Goldman Sachs upgraded the stock to "buy" from "neutral" given improved earnings growth visibility. Va Tech Wabag and KEC International were the other big winners and surged 5 percent each and 4 percent, respectively, post new order wins.