The market capitalisation of all listed companies on the BSE fell by Rs 2.63 lakh crore to Rs 475.3 lakh crore.
Reliance Industries, ICICI Bank, HDFC Bank, and Axis Bank together dragged the Sensex down by 450 points. Bharti Airtel, M&M, SBI, TCS, Infosys, and Tata Motors also contributed to the decline.
On the sectoral front, Nifty Bank, Auto, Financial Services, IT, Media, Realty, Healthcare, and Oil & Gas fell by up to 1.6%. Meanwhile, the fear gauge India VIX jumped 6.3% to 12.7.
However, Nifty Metal gained 1.5%, extending its winning streak after China’s announcement of measures to boost its slowing economy. NMDC, Hindalco, and SAIL 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.”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,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
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 the Indian equity market due to India’s dependency on oil imports.
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 Fedβs upcoming meeting.
Futures imply around a 53% chance the Fed will ease by 50 basis points on November 7.
4) 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.
“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,” V K Vijayakumar said.
More to come…
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