Markets under selling pressure; Sensex plummets over 1,400 pts below 79,000

Even as foreign portfolio investors (FPIs) pulled out another Rs 4,329 crore on Monday, all the sectoral indices were down with small-cap index falling by 1.72 per cent. RIL shares were down 2.77 per cent, Tata Motors 2.31 per cent, Sun Pharma 2.68 per cent, Tata Steel 1.84 per cent and Adani Ports 3.23 per cent. Realty index plunged 3 per cent, oil & gas by 2.54 per cent and power index by 2.06 per cent.

On November 1, stock markets ushered in Samvat 2081 on a positive note with BSE Sensex rising 0.42 per cent, or 335 points, at 79,724.12 and the NSE Nifty Index gaining 99 points at 24,304.35 on all-round buying support.

The Sensex lost 5.82 per cent in the month of October due to heavy selling by foreign investors who pulled out over Rs 1.14 lakh crore from the market during the month.

Analysts said a bearish sentiment prevailed in the market due to concerns over sluggish corporate commentary and potential earnings cuts. Several corporates like RIL and Hindustan Unilever had announced a decline in Q2 profits. Slower government spending in the first half of FY25 also impacted the sentiment. Although a pickup is anticipated in the second half, overall growth for the year is expected to be moderate. “The slowdown in consumption and investment in the second quarter has impacted the market,” said an analyst with a broking firm.

“Aggressive selling by FPIs due to a tactical shift to China has impacted the domestic market appeal, which was already affected by weak corporate earnings and premium valuations. Any reversal in FPIs’ stance will require an improvement in domestic corporate earnings and attainment of fair valuations,” said Vinod Nair, Head of Research at Geojit Financial Services.

Of late, emerging markets have turned cautious ahead of the US presidential election and the upcoming US Federal Reserve interest rate decision on November 7. Further, the recent spike in retail inflation due to rising food prices is likely to prompt the Reserve Bank to delay the rate cut plans, analysts said, adding that there were expectations that the RBI would cut Repo rate in the December policy.

“Markets witnessed broader sell-off as investors turned risk averse ahead of key US election outcome and Federal Reserve’s policy decision in the next few days’ time. While stretched valuation concerns have been weighing for some time, the persistent foreign fund outflows have created a lot of uncertainty amongst the investors resulting in a steep correction. Also, corporate earnings have failed to meet expectations, which has further dampened investors’ sentiment,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

Rupee falls

The rupee on Monday fell by four paise to a record low of 84.11 against the US dollar due to the sell-off in domestic equities and relentless foreign capital outflows.

The rupee touched new all-time lows weighed down by negative domestic markets which fell 1.18 per cent amid foreign fund sell-off. However, softening of the US dollar prevented a sharp fall.