Indian benchmark indices dropped nearly 1 per cent in early trade on Monday as investors turned cautious ahead of the US presidential election and Federal Reserve’s monetary policy meeting this week, while continued selling by foreign institutional investors (FIIs) also weighed on sentiment.
At the market open on November 4, 2024, the Sensex fell from its previous close of 79,724.12 to 78,975.99, a drop of 748.13 points or 0.94 per cent. The Nifty opened slightly higher at 24,315.75 from its previous close of 24,304.35 but slid to 24,080.15, down 224.20 points or 0.92 per cent by 9.40 AM.
“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,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “The Indian market is facing headwinds from decelerating earnings growth. Nifty EPS growth as indicated by Q2 results may dip below 10 per cent in FY25,” he added.
Auto stocks showed mixed trends, with Mahindra & Mahindra leading the gainers, up 2.31 per cent, while Bajaj Auto dropped 4.28 per cent and Hero MotoCorp fell 2.89 per cent. Technology stocks showed strength with Tech Mahindra rising 1.69 per cent and HCL Technologies gaining 1.29 per cent. Among other gainers were IndusInd Bank (0.59 per cent) and Cipla (0.48 per cent).
Major losers included Sun Pharma (-3.15 per cent), BPCL (-2.40 per cent), and Reliance Industries (-2.35 per cent).
The market weakness comes after FIIs sold shares worth over ₹1.14 lakh crore in October, marking significant outflows. “FIIs may continue to sell in this difficult earnings growth environment, constraining any rally in the market,” Vijayakumar noted.
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Global cues remained mixed. “The US is heading into a pivotal presidential election on November 5th, with polls indicating a tight race between Donald Trump and Kamala Harris,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd. “Election results, expected by November 8th, could impact global markets, especially if counting is delayed.”
The markets are also watching the Federal Reserve’s two-day policy meeting on November 6-7. US Treasury yields rose to four-month highs despite weaker-than-expected October jobs data, with the benchmark 10-year yield ending at 4.361 per cent.
On the domestic front, GST collections rose to a six-month high of ₹1.87 lakh crore in October, while passenger vehicle wholesales remained flat at around 390,000 units.
“The market is currently experiencing range-bound activity between 24000/79100 and 24500/80500 levels,” said Shrikant Chouhan, Head of Equity Research at Kotak Securities. “It could be the most volatile week for traders and investors.”
In commodities, crude oil futures rose after OPEC+ decided to delay production output increase by a month. Brent crude was up 1.50 per cent at $74.20 per barrel.
The week ahead remains crucial with multiple events including the Bank of England policy meeting and earnings from major companies like ABB India, Titan Company, Gail India, Dr. Reddy’s Lab, and Tata Motors.
India’s volatility index stood at 15, up from 10 levels a month ago, indicating mounting uncertainties in the market.