Dear
Trader…
Indian benchmark equity indices closed lower for the fifth
straight session on Friday.
The 30-share BSE benchmark Sensex fell 663 points, or 0.83%,
to close at 79,402. Meanwhile, the broader NSE Nifty Future decreased by 259
points, or 1.06%, finishing at 24,192. Both the benchmarks are down about 8%
from record highs hit on September 27 and are on track for their worst monthly
performance since March 2020.
The market capitalization of all listed companies on the BSE
decreased by Rs 6.03 lakh crore to Rs 437.76 lakh crore.
IndusInd Bank, Mahindra & Mahindra, Larsen & Toubro,
and Reliance Industries collectively contributed 418 points to today’s decline
in the Sensex. Additionally, NTPC, HDFC Bank, State Bank of India, Infosys, and
Bajaj Finance also experienced losses.
On the sectoral front, Nifty Auto, Media, Metal, PSU Bank,
Oil & Gas, and Consumer Durables fell over 2% each. Meanwhile, the fear
gauge India VIX jumped 4.74% to 14.63.
Key factors behind today’s market selloff.
1) Weak Q2 earnings
– Benchmark indices came under
pressure as several blue-chip and other companies reported disappointing Q2
results, leaving investors dissatisfied. In Friday’s trading, IndusInd Bank
fell 18.5%,contributing 136 points to the Sensex’s loss, while NTPC dropped 3%.
Both blue-chip stocks declined following disappointing quarterly results.
2) FII selling – Foreign investors have
offloaded Indian shares for the past 19 sessions, redirecting funds to China
due to Beijing’s stimulus measures and relatively cheaper valuations.
This correction is attributed
to sustained selling by foreign institutional investors (FIIs), which reached
Rs 98,085 crore by October 24.
3) High bond yields and strong dollar – The 10-year Treasury yield ticked down to 4.1801% on
Friday, following a four-basis-point decline in the previous session. However,
it remains elevated above 4%, having touched a three-month high of 4.26% on
Wednesday.
Meanwhile, the dollar index,
which measures the currency against six major peers, was little changed at
104.03 after retreating from Wednesday’s three-month peak of 104.57. For the
week, it has advanced by 0.56%.
Rising U.S. 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.
4) US election – The looming US election adds to the
uncertainty, with former Republican President Donald Trump and Democratic Vice
President Kamala Harris engaged in a tight race for key competitive states
ahead of the November 5 voting day.
Meanwhile, rising speculation
of a Trump win in certain betting markets has supported US yields and the
dollar in recent days, driven by the Republican candidate’s inflationary tax
and tariff policies.
5) Fading prospects for aggressive rate cuts
– Markets are currently pricing
in a 95.1% chance of a 25-basis-point cut at the Fed’s November meeting, with a
4.9% probability of the US central bank holding rates steady, according to
CME’s FedWatch Tool.
A month ago, the market was
fully pricing in a cut of at least 25 basis points, with a 58.2% chance of a
50-basis-point cut.
Nifty futures opened at 24452 points against the previous
close of 24400 and opened at a low 24068 points. Nifty Future closed with an
average movement of 389 points and decline of around 259 points and closed 24192
points…!!
Meanwhile, The consensus downward revision in FY25 earnings
estimates and the weak Q2 numbers have soured sentiment, shifting it to a
slightly bearish mode.
At the start of intra-day trading, October gold opened at Rs.78048
fell from a high of Rs.78244 points to a low of Rs.77836 with a rise of 202 points, a trend of around Rs.78125 and
December Silver opened at Rs.96701, fell from a high of Rs.96873 points to a
low of Rs.95620 with a Decline of 432 points, a trend of around Rs.96601.
Technically, the
important key resistances are placed in Nifty future are at 24192 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 24404 – 24474 levels. Immediate support is placed at 24108 –
23979 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
