\Dear Trader…
Sensex dropping over 1,250 points, while the Nifty ended
below the 25,990 mark amid profit booking at higher levels.The decline was led
by index heavyweights Reliance Industries, IT, and banking stocks.
The market capitalisation of all listed companies on the BSE
fell by Rs 3.55 lakh crore to Rs 474.38 lakh crore.
Reliance Industries, ICICI Bank, HDFC Bank, and Axis Bank
together dragged the Sensex down by 730 points. Infosys, M&M, Bharti
Airtel, SBI, and ITC also contributed to the decline.
On the sectoral front, Nifty Bank, Auto, Financial Services,
Pharma, PSU Bank closed 1-2% lower. Meanwhile, the fear gauge India VIX jumped
6.9% to 12.8.
However, Nifty Metal gained 1.3%, extending its winning
streak after China’s announcement of measures to boost its slowing economy.
NMDC, APL ApolloTubes, Welspun Corp, and JSW Steel were the top gainers in the
index.
Here are key factors that led to today’s fall –
1) FIIs
turn to Chinese markets – Foreign Institutional Investors (FIIs) have shifted their focus to the
Chinese market following a series of economic stimulus measures announced by
the Chinese government. The blue-chip CSI300 index rose by 3.0%, while the
Shanghai Composite surged by 4.4%, adding to last week’s 13% rally.
Additionally, China’s central bank announced plans to lower mortgage rates for
existing home loans, boosting investor confidence.
2)
Geopolitical uncertainty – Geopolitical tensions, particularly the escalation of Israeli strikes
across Lebanon, have added uncertainty to global markets. Although oil prices
have been kept in check by potential supply increases, the ongoing Middle East
conflict has led to heightened concerns over energy supplies. Rising crude oil
prices, with Brent crude futures up by 0.71% and U.S. West Texas Intermediate
increasing by 0.63%, have further impacted market sentiment, putting pressure
on.
3)
Nervousness ahead of key US data and Powell’s speech – Investors are on edge ahead of a series of key events this
week, starting with Federal Reserve Chair Jerome Powell’s speech later today. A
host of Fed officials are scheduled to speak throughout the week, and markets
are closely watching for signals on the direction of monetary policy. Key data
points, including job openings, private hiring numbers, and ISM surveys on
manufacturing and services, are also due.
The week will culminate with the US payrolls report, which
could influence whether the Federal Reserve opts for another significant
interest rate cut in November. Recent data showing moderate increases in
consumer spending and easing inflation pressures have further raised
expectations of an outsized rate cut at the Fed’s upcoming meeting.
Futures imply around a 53% chance the Fed will
ease by 50 basis points on November 7.
4)
Interest rate hike pressure from Japan – Markets also came under pressure on Monday after Japan’s ruling Liberal
Democrats chose former Defence Minister Shigeru Ishiba late Friday to succeed
Prime Minister Fumio Kishida, who is due to step down on Tuesday.Ishiba has
expressed support for the Bank of Japan’s potential moves to raise interest
rates from their near-zero level. He also backs other policies, such as
possibly raising corporate taxes, which are seen as less market-friendly
compared to his chief rival for the top job, Economic Security Minister Sanae
Takaichi, who he beat in a run-off vote.
The last time the Bank of Japan raised interest rates in
August, global markets saw a sharp decline. The Nikkei 225 index dropped by
12.4%, marking its worst day since 1987, while U.S. markets fell around 3%,
triggered by investors adjusting to the sudden rate hike, leading to sell-offs
in global equities.
5) FIIs
turn net sellers – Foreign Institutional Investors
(FIIs) turned net sellers, offloading equities worth Rs 1,209 crore on
September 27. Despite this, their total inflows for September remained strong,
exceeding Rs 57,000 crore for the month.
Nifty futures opened at 26345 points against the previous close of 26280 and opened at a low 25951 points. Nifty Future closed with an average movement of 350 points and rise of around 355 points and closed 25990 points…!!
Meanwhile,
Market is likely to move into a consolidation
phase in the near-term.One significant factor that is influencing foreign
portfolios is the outperformance of the Chinese stocks which is reflected in
the massive surge in the Hang Seng index by around 18 % in September. This
surge has been triggered by hopes of revival in the Chinese economy in response
to the monetary and fiscal stimulus announced by the Chinese authorities.
FIIs may continue to sell in India and shift more money to
better-performing markets. However, this selling is unlikely to impact the
Indian market significantly since the massive domestic money can easily absorb
whatever the FIIs are selling.
At the start of intra-day trading, October gold opened at Rs.76521
fell from a high of Rs.76622 points to a low of Rs.75900 with a decline of 286 points,
a trend of around Rs.75900 and December Silver opened at Rs.91519, fell from a
high of Rs.92156 points to a low of Rs.90308 with a decline of 807 points, a
trend of around Rs.90589.
Technically, the
important key resistances are placed in Nifty future are at 25990 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 26088 – 26188 levels. Immediate support is placed at 25880 –
25808 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
