A selloff across the board in response to increased tensions in the Middle East caused the Sensex to plummet by nearly 900 points and tumble below the 64,000 mark to 18,857.25, the Nifty fell 264.90 points, or 1.39 percent.
Analysts claimed that in addition to the weak trends in the world markets, there were significant losses in the auto, financial, and energy stocks, and new selling by foreign investors added to the pessimism. The 30-share BSE Sensex fell 900.91 points, or 1.41 percent, to close at 63,148.15, below the 64,000 barrier. It fell by 1.49 percent, or 956.08 points, to 63,092.98 during the day.
With a 4.06 percent decline, Mahindra & Mahindra was the largest loser in the Sensex pack. Bajaj Finserv, Asian Paints, Nestle, JSW Steel, Titan, HDFC Bank, Tech Mahindra, Tata Motors, and Larsen & Toubro were the next worst performers. On the other hand, the winners were IndusInd Bank, NTPC, Axis Bank, ITC, and HCL Technologies.
Since the Sensex and Nifty equity indices have declined in nine of the last ten trading sessions, stock market investors are very concerned. Given that the market is inherently forward-looking, it has begun pricing in the possibility that persistent geopolitical tensions will cause global financial conditions to tighten even further and that oil prices will remain higher in the upcoming months—possibly reaching $100 per barrel. These are the two main issues influencing the sentiment at the moment.
Sensex Dropping
Sensex has now dropped 3,308 points in six sessions, to a low of 63,119.21. Nifty dropped 962 points and broke below the 18,850 level of support before making modest gains.
Analysts claimed that in addition to the weak trends in the world markets, there were significant losses in the auto, financial, and energy stocks, and new selling by foreign investors added to the pessimism. The blue chips’ fall continued, reaching almost four-month lows.
The Nifty entered oversold territory for the first time in 16 months as a result of the benchmarks losing about 5% during the previous six sessions. At the close, the volatility index reached its highest level in more than three weeks, jumping 3.69% to 11.73.
To reach Rs 306.22 lakh crore, the market capitalization of all BSE-listed businesses decreased by 3 lakh crore.
Individual Share Holders
As a result of the FII sell-off, Nifty has dropped more than 1,300 points from its lifetime peak, and Sensex has down 4,800 points. Adani Enterprises, Adani Ports, IT stocks, HDFC Bank, and RIL have led the decline.
For the individual equities, Jubilant FoodWorks saw a 4% decline as the company revealed Q2 earnings that were below expectations.
Reports state that 42.4 lakh Zomato equity shares were exchanged in a block deal that was completed on Thursday. Nifty Metal experienced a 1.6% decline in value, led by JSW Steel, Adani Enterprises, and Vedanta. The auto, finance, FMCG, IT, pharmaceutical, banks, and real estate industries all had a poor year.
With a 14% loss during the period since September 15, when the Nifty reached its lifetime intra-day top of 20,222.45 and the Sensex reached 67,927.23, Tech Mahindra and Wipro have been the most losers among bluechips. Since then, Peer Infosys has decreased by almost 10%.
Meanwhile, Paytm, Macrotech Developers, and Jubilant Foods caused the Nifty Midcap 100 to drop 1.2%. Nifty Smallcap 100 saw a 0.34% decrease.
What the Sensex experts say?
According to Vinod Nair, Head of Research at Geojit Financial Services, “The real domestic Q2 results fall short of the highly anticipated earnings. Similar letdowns can be observed in industrialized economies. Due to the danger of a further downturn in the economy brought on by geopolitical unrest and rising interest rates, profits and valuation are declining.”
“Additionally, expiry-led volatility increased selling pressure by telling investors to exercise caution,” he added.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said ,”The biggest sectors of the AUM of FPIs, which are banking and IT, are probably going to face pressure. Long-term investors would have the chance to purchase high-quality stocks—especially in the banking industry—at competitive prices thanks to this.”
According to Vijayakumar, FPIs might be in the sell mode because the yield on a 10-year bond is currently close to 5%.
“On the daily chart, Nifty maintained its bearish trajectory, targeting 18,400 in line with correction wave C,” stated Mandar Bhojane, Equity Research Analyst at Choice Broking. At 18,650 is the immediate resistance. But in the upcoming days, a rally towards 19,200 might be expected if the stock closes over 19,000.”
Worldwide Markets
In the midst of a busy week for corporate earnings, with an ECB meeting and the publication of US GDP later in the day, US Treasury rates were going back near 5% on Wednesday, sending shares around the globe to multi-month lows.
US futures fell as profit results from some of the country’s most powerful firms were mixed.
The third major worry for the market is the dollar’s increase following positive US economic data and the rupee’s subsequent decline.
The Kospi in Seoul fell 2.3%, and the Nikkei 225 in Tokyo fell 2.1%. The Shanghai Composite index dropped 0.3%, and the Hang Seng in Hong Kong fell 0.8%.
According to VK Vijayakumar of Geojit Financial Services, geopolitics and economics are working together to cause a risk-off in the world’s equity markets.
Oil Prices hike
Following a surge in US crude stocks and an increase in the dollar index, oil prices declined on Thursday, giving up some of the territory they had gained the day before when prices spiked on worries about a wider conflict in the Middle East.
“Markets are still facing significant obstacles due to the Israel-Hamas conflict. When the world economy is already experiencing a slump, a protracted conflict could also have an effect on global growth. However, the market’s biggest short-term obstacle is the US bond market’s persistently high yields, the speaker stated.
At $89.33 a barrel, Brent crude futures saw a decrease of 80 cents, or 0.9%. At $84.48 a barrel, US West Texas Intermediate crude futures decreased by 91 cents, or 1.1%.
Indian Rupee Fall
According to NSDL data, FPIs have sold off equity worth Rs 9,935 crore in October thus far. In addition, there were outflows of Rs 14,768 crore from the preceding month.
Due to ongoing stock market withdrawals and rising US Treasury rates, the Indian rupee ended the day marginally lower on Thursday. But the Reserve Bank of India’s (RBI) probably curbed the losses with sales in US dollars.
According to forex dealers, the local currency was also negatively impacted by the withdrawal of foreign funds and rising crude oil prices. The Indian currency has declined for the third time in a row. On Monday, it fell by 4 paise, and on Wednesday, it fell by 1 paisa, ending at 83.17. After closing at 83.18 in the previous session, the rupee finished at 83.23, down 0.06%.
SENSEX
For the unversed, Sensitivity and Index are the two words that make up the word Sensex. Sensex, often known as the BSE 30, is a market index made up of 30 reputable businesses that are stable, profitable, and operating profitably. The Sensex ensures that only high-quality stocks are included in the index by only including stocks that have undergone thorough due diligence.
The Companies wishing to be added to Sensex must meet these five requirements:
- A listing on the Bombay Stock Exchange (BSE) is required
- Has to be a large or medium-sized business
- High liquidity is expected for shares
- Industry Weight of the Business
- Primary activities should generate the majority of revenue.
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