Dear
Trader…
The 30-share BSE Sensex fell 930 points, or 1.15%, to settle
at 80,220, while the broader NSE Nifty Future plunged 250 points, or 1.01%, to
close at 24,538.
The market capitalisation of all listed companies on BSE
dropped by Rs 9.34 lakh crore to Rs 444.31 lakh crore.
Reliance Industries, HDFC Bank, M&M, SBI, and L&T
together dragged the Sensex down by 505 points. TCS, NTPC, Tata Motors, Axis
Bank and Power Grid also contributed to the decline.
The broader, more domestically focused Nifty Smallcap100
index dropped 3.7%, while the Nifty Midcap100 fell 2.3%, underperforming the
benchmark indices. Meanwhile, the fear gauge India VIX jumped 5.2% to 14.48.
Sector-wise, Nifty PSU Bank and Realty led the
losses, falling 4.2% and 3.3%, respectively. Additionally, Nifty Auto, Media,
Consumer Durables, and Oil & Gas sectors each closed over 2% lower.
Domestic equities have seen profit-taking since reaching
record highs on September 27, with the Nifty losing nearly 7% from its all-time
high.
1) Weak Q2 Earnings
– Corporate earnings, after four consecutive years of strong double-digit
growth, are starting to moderate.The benchmark indices came under pressure
after several blue-chip and other companies reported disappointing Q2 results,
leaving investors dissatisfied. Following these results, investors are now
shifting towards more defensive stocks.
2) Global Selloff –
Indian equity markets fell in tandem with global markets on Tuesday, tracking a
dip in global stocks. The MSCI All-World index slipped 0.2%, while U.S. futures
signaled another weak start after Monday’s decline in benchmark indices.
Japan’s Nikkei also dropped 1.6%, hitting its lowest level since early October.
3) Rise in Bond Yields and Strong Dollar –
US bond yields and the dollar traded near
multi-month highs. Rising US bond yields and a stronger dollar are generally
negative for the Indian equity market as they can trigger foreign fund outflows
and increase import costs, ultimately impacting corporate earnings. Benchmark
10-year Treasury yields rose 2 basis points to 4.21%, extending a sharp move
higher and hitting their highest since late July. The dollar index was at
103.96.
4)
US Election – The looming U.S. election adds to
the uncertainty, with former Republican President Donald Trump and Democratic
Vice President Kamala Harris engaged in a tight race to secure key competitive
states ahead of the November 5 voting day.Trump’s lead in online betting
polls has contributed to the dollar’s recent rise to a 2.5-month high, as his
proposed tariff and tax policies could lead to stronger inflation and prolong
higher U.S. interest rates.
5)
Pressure from FIIs Selling – This time the trigger for the correction has come from the sustained
selling by FIIs which has reached Rs 88,244 crores by 21st October, according
to NSDL.
The fact is that even after the correction triggered by the
sustained FII selling, Indian market valuations are higher than historical
averages even though largecap valuations can be justified by their long-term
growth prospects. Since market sentiments continue to be negative a sharp and
sustained recovery appears difficult even though a rebound can happen any time.
6)
Declining Odds for High Rate Cut – The
likelihood of the U.S. Federal Reserve implementing a quarter-point rate cut at
its November 7 meeting has decreased to 87%, down from near certainty just a
week ago, according to CME’s FedWatch tool.A host of data signalling
U.S. economic strength have thrown cold water on bets over another outsized
cut, following the Fed’s decision to cut rates by half a point in September.
Nifty futures opened at 24789 points against the previous
close of 24788 and opened at a low 24507 points. Nifty Future closed with an
average movement of 432 points and decline of around 250 points and closed 24538
points…!!
Meanwhile, The earnings cycle is showing signs of slowing down, and
we’ve seen a decline in consensus earnings estimates over the past six months.
Small caps are particularly vulnerable to any interim cyclical slowdown in
economic momentum and may experience steeper cuts.
The recent sharp rise in US bond yields signals diminished
expectations for aggressive rate cuts by the US Fed, also affecting fund flows
to Ems.
At the start of intra-day trading, October gold opened at Rs.78700
fell from a high of Rs.78890 points to a low of Rs.78691 with a rise of 249
points, a trend of around Rs.78787 and December Silver opened at Rs.97945, fell
from a high of Rs.99171 points to a low of Rs.97715 with a rise of 1308 points,
a trend of around Rs.98735.
Technically, the
important key resistances are placed in Nifty future are at 24538 levels, which
could offer for the market on the higher side. stainability above this zone
would signal opens the door for a directional up move with immediate
resistances seen at 24575 – 24676 levels. Immediate support is placed at 24404 –
24373 levels.
Past Performance is not an Indicator of Future Returns. The
securities quoted are for illustration only and are not recommendatory. Investment
in securities market are subject to market risks. Read Disclaimer and related
all the documents carefully before investing, mentioned on www.nikhilbhatt.in
