Stock Market Today: Iran-Israel war, Sebi F&O rules, KRN Heat IPO listing

Share market today, October 3, 2024: Rising tensions in the Middle East are likely to impact Indian stock markets today. Several reports indicate that the Israeli military has confirmed the deaths of eight soldiers, including a team commander, during ground operations in southern Lebanon. This escalation follows missile attacks from Iran targeting Tel Aviv, with Israel's military chief warning of an imminent response to Iran.

Additionally, GIFT Nifty signals a gap-down opening for benchmark indices Sensex and Nifty50 on Thursday, hinting a weak start for the markets. At 7:11 AM, GIFT Nifty futures were down approximately 241 points, trading at 25,728.5 levels.

How did global markets react to it?

On Wednesday, the S&P 500 saw minimal movement, with technology stocks performing well amid investor concerns over rising tensions in the Middle East and upcoming US jobless claims data (later today). The S&P 500 increased by merely 0.01 per cent, the tech-heavy Nasdaq Composite rose 0.08 per cent, and the Dow soared 0.09 per cent.

However, in reaction to Iran's attack on Israel, US stocks declined on Tuesday, October 1. Consequently, Dow Jones dropped 0.41 per cent, while the S&P 500 fell 0.93 per cent. The Nasdaq Composite saw the most major loss, decreasing 1.53 per cent.

West Texas Intermediate crude oil surged after the Israel Defense Forces (IDF) reported missile strikes from Iran. The CBOE Volatility Index (VIX), often referred to as Wall Street’s fear gauge, rose above 20 during the day, reflecting growing anxiety among traders. However, oil prices settled lower by the end of the session, and stocks recovered somewhat after initial fears subsided, as investors speculated that any damage and potential Israeli retaliation would be limited.

Asia-pacifiic markets

In the Asia-Pacific region, Japanese stocks led the way on Thursday, buoyed by Wall Street's modest gains. The Nikkei 225 climbed about 2.5 per cent, and the broad-based Topix also rose 2 per cent. 

The yen fell to 146.54 against the US dollar, following comments from Japan’s new Prime Minister Shigeru Ishiba, who stated that current economic conditions do not support another rate hike. 

Meanwhile, markets in mainland China are closed until October 8 for a week-long holiday, and South Korea is shut today for National Foundation Day.

Commodity insights

US crude oil prices held steady on Wednesday as tensions in the Middle East escalated, although prices softened from session highs due to a reported increase in US stockpiles.

West Texas Intermediate for November traded at $70.10 per barrel, up 27 cents (0.39 per cent), while Brent for December was at $73.90 per barrel, up 34 cents (0.46 per cent). Year-to-date, US crude was down about 2 per cent, and Brent is down about 4 per cent. 

On the same day, gold prices dipped slightly after a rally, with spot gold down 0.5 per cent at $2,649.41 per ounce, while US gold futures settled 0.8 per cent lower at $2,669.70. Traders, however, remain cautious amid ongoing geopolitical developments and economic indicators.

Other market triggers

Back home, the Securities and Exchange Board of India (SEBI) has introduced a six-step plan aimed at curbing retail participation in speculative index derivatives, which could lead to a potential 30-40 per cent drop in trading volumes. This is intended to mitigate excessive speculation in the futures and options segment. READ MORE

Also Read: Chris Wood trims India exposure; says geopolitics biggest risk to markets

Investors will also be monitoring a busy data schedule in Asia, including Australia's Judo Bank Composite PMI for September, which dropped to 49.6 from 51.7 in August. The Australian Bureau of Statistics is expected to report a trade surplus of AU$5.5 billion for August, down from AU$6.01 billion in July. Additionally, Japan's PMI data for September and Hong Kong's retail sales for August will be released.

In the US, attention is on jobless claims data for the week ending September 28, along with S&P global composite and services data for September.

Previous session highlights

In the previous session on October 1, the BSE Sensex and NSE Nifty50 had ended with slight declines. The Sensex closed at 84,266.29, down 33.49 points (0.04 per cent), while the Nifty50 finished at 25,796.90, declining 13.95 points (0.05 per cent).
Notably, Indian bourses remained closed on October 2 on the account of Mahatma Gandhi Jayanti.

IPO watch

Several IPOs are set to list today, including KRN Heat Exchanger and Refrigeration Limited (Mainboard), TechEra Engineering Limited (SME), Unilex Colours and Chemicals Limited (SME), and Thinking Hats Entertainment Solutions Limited (SME). 

Additionally, Paramount Dye Tec Limited (SME) and Subam Papers Limited (SME) will enter the final day of their subscription.

Market activity snapshot

On October 1, Foreign Institutional Investors (FIIs) sold shares worth Rs 5,579.35 crore, while Domestic Institutional Investors (DIIs) bought shares worth Rs 4,609.55 crore.

Here's how analysts are assessing today's (October 3) trading session:

Shrikant Chouhan, head of equity research, Kotak Securities
 

We are of the view that 25,910/84,650 would be the trend decider level for the bulls. As long as the market is trading below the same, the weak sentiment is likely to continue. On the down side, the market could retest the level of 25,680-25,650/84,000-83,700. On the flip side, above 25,910/84,650 the market could bounce back up to 25,975-26,000/84,900-85,000. The current market texture is non-directional hence level based trading would be the ideal strategy for the day traders.

Vinay Rajani, CMT, senior technical and derivative analyst, HDFC securities
 

After a large fall in the previous session, Nifty seems to be consolidating and did not see a large follow through selling. Nifty could face resistance from the 25,956-26,011 band while 25,446 could offer support in the near-term.

Rupak De, senior technical analyst, LKP Securities

Nifty formed a doji pattern with a long upper shadow on the daily chart on October 1, indicating market indecision. Heavy call writing at 25800 suggests it may act as strong resistance if sustained. Immediate support lies at 25,750, and a decisive break below this could push the index to 25,600/25,500. On the higher side, a move above 25,800 may propel Nifty towards 26,050, where sellers could become active again.