Market Today: State elections, Israel War, Oil, Garuda Construction IPO

Stock market today, October 08, 2024: Benchmark indices – Nifty50 and Sensex – may see a lower start, influenced by movements in Wall Street and GIFT Nifty futures.

At 6:38 AM, GIFT Nifty Futures were trading 114 points lower at 24,871, indicating a potential gap-down opening for Indian markets.

Wall Street influence

On Monday, Wall Street’s major indices closed approximately 1 per cent lower. The drop followed rising Treasury yields as traders adjusted their expectations regarding Federal Reserve interest-rate cuts, while concerns about escalating conflicts in the Middle East impacted oil prices.

The 10-year Treasury yield surpassed 4 per cent, reaching its highest level since early August, applying downward pressure on markets.

 

Thus, the Dow Jones Industrial Average fell 0.94 per cent, S&P 500 lost 0.96 per cent and Nasdaq Composite dropped 1.18 per cent. 

The CBOE Volatility Index (VIX), often referred to as Wall Street's fear gauge, increased 3.4 points to close at 22.64, marking its highest level since August 8.

Investors will also keep an eye on the US August trade data, which is expected to be announced later today. 

Asian Markets

Asian markets displayed mixed reactions. Japan’s current account surplus rose to JPY 3,803.6 billion in August 2024, exceeding expectations. However, household spending in Japan declined 1.9 per cent year-on-year, performing better than forecasts of a 2.6 per cent drop. 

Consequently, the Nikkei and Kospi fell over 0.6 per cent, while Australia’s ASX200 managed a slight gain of 0.19 per cent. The Chinese market will reopen today after a week-long holiday.

Middle East war intensifies 

The situation in the Middle East is escalating, with Hezbollah launching rockets at Haifa, Israel’s third-largest city. As Israel prepares to intensify its military operations in Lebanon, fears of a broader regional conflict are mounting, marking the one-year anniversary of the Hamas attack on Israel that initiated the Gaza war.

Hezbollah's strikes included targeting a military base south of Haifa, and reports indicate around 190 projectiles were fired into Israeli territory on Monday, resulting in at least 12 injuries.

Oil prices continue to fly

US crude oil prices surged over 3 per cent on Monday amid fears of an Israeli strike on Iran. Last week, oil prices spiked considerably, with US benchmark West Texas Intermediate gaining 9.09 per cent for its largest weekly increase since March 2023, while global benchmark Brent rose by 8.43 per cent, marking its biggest weekly gain since January 2023.

As per the latest figures, the November contract for West Texas Intermediate is priced at $77.14 per barrel, reflecting an increase of $2.76, or 3.71 per cent. Year-to-date, US crude oil has appreciated by more than 7 per cent.

Meanwhile, the December contract for Brent is trading at $80.93 per barrel, up $2.88, or 3.69 per cent. Year-to-date, Brent has gained approximately 5 per cent, underscoring the upward momentum in global oil markets.

Gold prices drop

Gold prices fell on Monday as the US dollar strengthened and traders scaled back expectations for significant rate cuts by the Federal Reserve. Spot gold dipped 0.4 per cent to $2,640.74 per ounce, retreating from its record peak of $2,685.42 on September 26. US gold futures decreased by 0.3 per cent to $2,660.1, with the dollar holding near a seven-week high.

State elections update

Exit polls indicated that the national party BJP suffered losses in two key provincial elections, with the main opposition Congress party and its allies projected to come out on top. This setback followed the BJP's disappointing performance in recent national elections.

Also Read: Will markets crash if BJP loses Haryana, J&K, Maharashtra, Delhi state polls?

Reports suggest that Congress has a strong lead in Haryana, while they also seem to have an advantage in Jammu and Kashmir. 

The elections were conducted in phases concluding on Saturday, and the counting of votes is scheduled for Tuesday, with results expected to be announced on the same day. The exit poll findings were revealed late Saturday evening.

Market activity

On October 07, foreign institutional investors (FIIs) continued their selling spree, offloading shares worth Rs 8,293.41 crore, while domestic institutional investors (DIIs) purchased shares worth Rs 13,245.12 crore.

Also Read: FPIs' holdings in Indian securities surpass $1 trillion for the first time

IPO corner

Hero Motors Ltd, the auto-components firm of the Hero Motors Company (HMC) Group, has withdrawn its documents for an initial public offering (IPO) worth Rs 900 crore, an update with markets regulator Sebi showed on Monday. READ MORE

Apart from that, Garuda Construction and Engineering Limited IPO (Mainline) and Shiv Texchem Limited IPO (SME) are set to open for subscription today, while Subam Papers Limited IPO (SME) and Paramount Dye Tec Limited IPO (SME) will debut on the bourses today.

Previous session recap

On October 08, benchmark equity indices surrendered initial gains, closing in the red. The BSE Sensex fell by 638.45 points (0.78 per cent) to settle at 81,050, while the NSE Nifty50 decreased by 218.85 points (0.87 per cent) to finish the session at 24,795.75. Midcap and Smallcap stocks were particularly hard hit, with the Nifty Midcap 100 and Nifty Smallcap 100 indices down by 2.01 per cent and 2.75 per cent, respectively.

Also Read: India Inc earnings, revenue growth in Q2 may stay muted

Here's how analysts are assessing today's (October 08) trading session:

Deepak Jasani, Head of Retail Research at HDFC Securities

Nifty formed a long bear candle on Monday in a continuation sign of the downside momentum. Nifty moved below the previous bottom of 24,753. The trend of the Nifty remains weak and sell-on-rise behaviour may be witnessed for some more time, although as the short term trend has become oversold, a bounce can be expected any time. Nifty could face resistance from 25,015, while 24,347-24,367 band could provide support in the near-term.

Rupak De, Senior Technical Analyst, LKP Securities

The Nifty slipped further due to ongoing geopolitical concerns, with sentiment worsening as the index fell below the 55 EMA, indicating a bearish trend. A bearish crossover in the RSI is adding to the downward price momentum. In the short-term, the trend may remain volatile, with a predominantly bearish outlook. Overall, the market appears to be "sell on rise" as long as it stays below 25,000. On the downside, support levels are positioned at 25,700, 25,590, and 25,400.

Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates

On the daily chart, the index formed a red candle, signalling weakness. However, the index managed to defend the 24,750 level, providing some relief for the bulls. As long as the index holds within the 24,700–24,750 range, a short-term pullback could be possible. However, if Nifty sustains below 24,700, deeper declines could follow.