 "Blood on D-St: Why Nifty dropped below 24,000, Sensex fell 942 pts today?")
Stock market today: Indian equity indices Sensex and Nifty opened in the negative territory and continued their downward spiral. Nifty50 plunged to an intraday low of 23,816, falling over 2 per cent or 488.2 points from the previous close. Nifty had slipped below the 24,000 level last on August 6, 2024.
Mirroring the Nifty50, the BSE Sensex slumped to 78,232.6, down 1,491.52 points or 1.87 per cent. At close, the BSE Sensex stood at 78,782.24, down 941.88 points or 1.18 per cent. Similarly, the NSE Nifty50 ended lower by 309 points or 1.27 per cent to settle at 23,995.35.
Meanwhile, India VIX or the India Volatility Index, a metric that measures the expected volatility of the Nifty 50, spiked nearly 9 per cent intraday before settling 5 per cent higher.
The key reason for the fall can be attributed to the following:
Worries around US elections
With the US voting to elect its next president on Tuesday, November 5, markets around the world are feeling the effects of a close race between former President and Republican candidate Donald Trump and incumbent VP and the Democratic contender, Kamala Harris.
As per reports, the US Democratic presidential candidate Kamala Harris surpassed Republican Donald Trump in a new poll in Iowa. "Kamal Harris' win is not good news for India," said Ambareesh Baliga, independent market analyst.
Phillip Capital in a recent note had said Harris’ win would be neutral/mean continuity for the economy, equities, and other asset classes.
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It had added: Trump would have a reasonable impact on emerging markets (EMs), equities, and currency due to de-globalisation.
On a similar note Gaurang Shah, senior vice president at Geojit Financial Services said, "Worries around who will be the next US President are weighing on market sentiments."
The Sensex and the Nifty historically have gained 82.3 per cent and 73.6 per cent respectively under Trump 1.0 as compared to 59 per cent and 64.5 per cent under the Biden administration, data shows. READ MORE
Muted Q2 earnings
According to a post-results analysis by brokerage firm, Motilal Oswal Financial Services, the earnings of the 34 Nifty 50 companies that have reported results till October have remained flat year-on-year compared to an estimated positive growth rate of 2 per cent last year. READ MORE
"Earnings are muted and slightly disappointing which is discouraging investors to buy on dips," said Deepak Jasani, sr VP - head retail research, HDFC Securities Ltd.
FII selling
The consistent selling by foreign institutional investors (FII) has also dented market sentiment for all of October and the trend looks to be continuing in November. In the month of October, FIIs sold Rs 94,017 crore in the Indian equities, as per NSDL data. On Friday, November 1, FIIs sold Rs 211.93 crore worth of equities.
Auto sales data
Wholesales data for the month of October also weighed on markets, as a build-up inventory with dealers and concerns around muted retail sales during the ongoing festive season weighs on the performance of auto makers.
In wholesale terms, passenger vehicle sector recorded a modest 1.8 per cent increase from the previous year, to a total of 401,447 units in October.
As per Baliga, auto sales numbers for October were not that great.
At last count, Nifty Auto fell 2.28 per cent to 23,263.75.
Out of the 15 stocks in the index, 14 declined and only 1 advanced. Among others, Hero MotoCorp, Bajaj Auto, TVS Motor, Tata Motors, and Eicher Motors slipped between 5.53 per cent to 3.04 per cent.