Indian benchmark equity indices Sensex and Nifty traded lower on Monday, impacted by declines in banking, financial, and IT stocks
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Indian benchmarks—the 30-stock Sensex and the Nifty 50—fell around a percent each in opening trade on November 4, kicking off an action-packed week marked by the US Presidential election and the Federal Reserve’s monetary policy meeting on a weak note.
The BSE Sensex plunged 1,409 points, or 1.77 per cent, to 78,316, while the Nifty50 declined 454 points, or 1.87 per cent, to 23,850 at around 10:58 am.
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The market capitalisation of all listed companies on BSE declined by Rs 8.44 lakh crore to Rs 439.66 lakh crore.
Reliance Industries, Infosys, ICICI Bank, HDFC Bank, and Sun Pharma were the top laggards on the Sensex, contributing a decline of 420 points. L&T, Axis Bank, TCS, and Tata Motors also weighed down the index.
Why Is the Market Falling Today?
US Elections
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.
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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).
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.
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“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,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
US Fed Outcome
The major event on the radar this week is the US Presidential election on November 5, followed by the Fed’s monetary policy outcome on November 7. While the US central bank is widely expected to deliver another rate cut—a quarter-percentage point this time around—the results of the US Presidential election have kept investors on edge. Touted as one of the most closely contested elections in US history, the outcome is expected to play a decisive role in shaping policies in the world’s largest economy and impacting global markets.
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“A double dose of potentially market-moving events arrives in the coming week as Americans vote on their next president and the Federal Reserve offers more insight on the path of interest rates at its monetary policy meeting,” said Deepak Jasani, Head of Retail Research at HDFC Securities.
Weak 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,” said Vijayakumar.
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Oil On The Rise
In the midst of that, oil prices ticked nearly 2 percent higher, gaining over $1 per barrel after OPEC+ stated it would delay a planned December output hike by one month due to soft demand and rising supply outside the group.
Nifty Technicals
On the technical front, Palka Arora Chopra, director of Master Capital Services, sees key resistance for the Nifty 50 at 24,500. A breakout above this level could potentially trigger a rally towards 24,800.
Conversely, Arora suggests that if the Nifty breaks below 24,100, it could experience further selling pressure, possibly testing the 23,800 level. “The market remains under pressure, suggesting a cautious stance. The strategy remains to sell on any rise until a decisive breakout above resistance confirms a bullish reversal,” Arora recommended.
The market’s uneasiness was also reflected in a more than 5 percent spike in the ‘fear gauge’ India VIX, which hovered above the 16-point mark.
