Dear
Trader…
Benchmark BSE Sensex fell over 1500 points, while Nifty
Future fell below the 24,000 level on Monday, weighed down by uncertainty
around the hotly-contested US presidential election, while volatility spiked to
a three-month high.
The NSE Nifty future fell 1.16% to 24100, while the BSE
Sensex lost 1.18% to 78,782. Both benchmarks logged their biggest single-day
drop since October 3. The market
capitalisation of all listed companies on the BSE declined by Rs 6.08 lakh
crore to Rs 442.02 lakh crore.
All major sectors recorded losses, with the more domestically
focused small and midcap indices declining by 2% and 1.3%, respectively. The
Nifty volatility index climbed to 16.69, marking its highest level since early
August.
Key factors behind today’s market meltdown –
1) Nervousness Ahead of the US Election –
The uncertainty surrounding the U.S. presidential election on
November 5 has contributed to a cautious sentiment in the Indian market today.
With Democratic Vice President Kamala Harris and Republican former President
Donald Trump in a close contest, investors are wary of the potential economic
implications.
Analysts suggest that the outcome could lead to varying
policy approaches affecting the Indian economy. A victory for Harris may prompt
a more accommodative stance from the U.S. Federal Reserve, potentially leading
the Reserve Bank of India (RBI) to ease domestic rates, which would benefit
non-banking financial companies (NBFCs).
2) Fed Meeting Outcome
–
The upcoming U.S. Federal Reserve policy meeting on November
7 is also adding to the apprehension in the Indian market.Analysts anticipate a
potential quarter-percentage-point rate reduction, which could drive foreign
investment inflows to India. However, until there is clarity on the Fed’s
stance, investors are likely to remain cautious, contributing to today’s market
decline.
3) Disappointing Q2 Earnings
–
Investor sentiment has been dampened by disappointing Q2
earnings from Indian corporates, contributing to a decline in the equity market
and prompting FIIs to offload Indian stocks.
The Indian market is facing headwinds from decelerating
earnings growth. Nifty EPS growth as indicated by Q2 results may dip below 10%
in FY25 which will render the present valuations of about 24 times estimated
FY25 earnings, difficult to sustain. FIIs may continue to sell in this
difficult earnings growth environment, constraining any rally in the market.
4) Rise in Oil Prices
–
Oil prices rose over 2% on Monday on a decision by the OPEC+
to delay by a month plans to increase output, while the market braced for a
crucial week that includes the US presidential election and a key meeting in
China. Brent futures were up $1.81 per barrel, or 2.5%, to $74.91 a barrel.
U.S. West Texas Intermediate (WTI) crude was up $1.86 a barrel, or 2.7%, to
$71.35.
On Sunday, OPEC+, which includes the Organization of the
Petroleum Exporting Countries plus Russia and other allies, said it would
extend its output cut of 2.2 million barrels per day (bpd) for another month in
December, with an increase already delayed from October because of falling
prices and weak demand.
Nifty futures opened at 24379 points against the previous
close of 24383 and opened at a low 23900 points. Nifty Future closed with an
average movement of 479 points and decline of around 283 points and closed 24100
points…!!
Meanwhile, In the next couple of days markets globally will
be focused on the US presidential elections and there can be near-term
volatility in response to the election outcome. However, this is likely to be
short-lived and economic fundamentals like US growth, inflation and the Fed
action will influence the market trend.
Conversely, a Trump win could keep U.S. interest rates
elevated, prompting the RBI to maintain higher rates and delaying any rate
cuts, favoring public sector banks (PSBs) instead. This uncertainty is causing
investors to adopt a wait-and-see approach, impacting market performance.
Technically, the
important key resistances are placed in Nifty future are at 24100 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 24008 – 23880 levels. Immediate support is placed at 24272 –
24303 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
