Benchmark stock market indices opened Monday’s trading session on a negative note, dragged by declines in information technology and financial stocks.
The BSE Sensex was down 821 points, or 0.96%, trading at 84,750.44, while the Nifty50 dropped 206 points, or 0.79%, to 25,973.15 at around 9:50 am.
The market capitalisation of all listed companies on the BSE fell by Rs 2.73 lakh crore to Rs 475.2 lakh crore.
More than half the stocks were red on the BSE Sensex around opening bell. Gains were led by NTPC, Tata Steel, JSW Steel, Titan, and Bajaj Finance, while Tech Mahindra, ICICI Bank, Infosys, Mahindra & Mahindra, and TCS, were the top drags.
On the Nifty 50, 28 out of the 50 stocks were in the red. Losses were led by Hero MotoCorp, Infosys, Tech Mahindra, ICICI Bank, and Mahindra & Mahindra, while BPCL, NTPC, Hindalco, JSW Steel, and Tata Steel were the top laggards.
Across sectors, the Nifty Metal was the top gainer (up 1.41 per cent) followed by Consumer Durables and Oil & Gas.
In contrast, the Nifty Realty was the top drag (down 1.12 per cent), followed by IT and Auto, which were down 0.95 per cent and 0.80 per cent, respectively.
Why Are Markets Falling?
The share market also turned hesitant on Monday due to the conflict in the Middle East. Continued Israeli attacks in Lebanon have increased geopolitical uncertainty.
Meanwhile, the week is packed with major U.S. economic data including a payrolls report that could decide whether the Federal Reserve delivers another outsized rate cut in November.
Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “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 per cent 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,” he explained.
He also noted that the cheap valuations of Chinese stocks are keeping the momentum intact.n “This can prove to be a tactical trade which can sustain for some more time. This means FIIs may continue to sell in India and move some more money to better performing markets,” Vijayakumar added.
FIIs Turn To China
However, he clarified that FII selling is unlikely to impact the Indian market significantly since the massive domestic money can easily absorb whatever the FIIs are selling. “Investors can use dips to buy quality largecaps which are fairly valued.”
Hardik Matalia, Derivative Analyst at Choice Broking, said, “After a negative opening, Nifty can find support at 26,050 followed by 26,000 and 25,900. On the higher side, 26,250 can be an immediate resistance, followed by 26,300 and 26,350.”
Asian Markets
Asia share markets turned hesitant on Monday as strife in the Middle East offset more stimulus measures in China, while the Nikkei dived on concerns Japan’s new prime minister favoured normalising interest rates.
The rush of stimulus helped outweigh a poor manufacturing survey and lift the blue-chip CSI300 another 3.0%, having already jumped 16% last week. The Shanghai Composite climbed 4.4%, on top of last week’s 13% rally.
The Nikkei led the early action with a dive of 4.1% as investors anxiously waited for more direction from new Prime Minister Shigeru Ishiba, who has been critical of the Bank of Japan’s easy policies in the past.
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.
Oil Prices Rise
Oil prices extended gains on Monday, buoyed by escalating concerns over potential supply pressures from Middle East producers following Israel’s increased attacks on Iranian-backed forces in the region.
Brent crude futures for November delivery increased 51 cents, or 0.71%, to $72.49 a barrel. That contract expires on Monday, and the more-active contract for December delivery gained 50 cents, or 0.7%, to $72.04. U.S. West Texas Intermediate crude futures added 43 cents, or 0.63%, to $68.63%, to $68.61 a barrel.
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