The Indian stock market experienced significant turbulence on November 4, 2024, with hefty declines across all major indices, causing widespread concern among investors. The BSE Sensex logged an alarming drop of 942 points, closing at 78,543.59, marking one of the sharpest declines seen this year. Similarly, the Nifty 50 index fell by 309 points to settle below the 24,000 mark, at 23,995.35. These figures underline the rocky terrain facing equity investors amid swirling economic uncertainties.
The turmoil on the Indian exchanges was echoed globally as mixed cues from international markets created an atmosphere of unease. Investors were particularly jittery, hovering on the sidelines, largely due to the impending US presidential elections and the associated uncertainties around Federal Reserve policy decisions. Analysts noted this atmosphere contributed to volatility, as many anticipated market reactions depending on the election results.
According to experts, the short-term outlook for the Nifty remains weak, with key support levels being closely monitored. Nagaraj Shetti of HDFC Securities indicated the next significant support could be around the 23,500 level, directly aligning it with the 200-day exponential moving average (EMA). This technical analysis suggests any potential rebound might encounter resistance around the 24,200 threshold.
All sectors faced the brunt of the selling pressure, but the Nifty Energy index suffered the most, declining by approximately 3.26%. Major companies like Reliance Industries and Tata Motors were particularly hard-hit, significantly dragging down the indices. From the ten most affected companies, notable mentions included Infosys, Maruti Suzuki, Sun Pharma, and NTPC, each contributing to the overall decline.
To add to the dismay, foreign institutional investors continued their trend of offloading equities, having sold off shares worth around Rs 211.93 crore on the previous Friday alone. The month of October saw unprecedented outflows from the Indian equity markets, amounting to close to Rs 94,000 crore (roughly USD 11.2 billion), largely attributed to perceived overvaluation within domestic stocks and increasingly attractive alternatives from international markets, particularly China.
Investors are also wary of how global economic factors, especially pertaining to US economic growth and inflation rates, might influence Indian market trends. Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented on the situation: "Markets globally will focus intently on the US presidential elections over the coming days, which could bring near-term volatility. Yet, this is likely to be transient; the economic fundamentals such as growth rates and the Fed's actions will carry more weight for future market movements."
The broader market reflected the sentiment as well, with 430 stocks witnessing upper circuit limits, indicating heightened activity, though predominantly negative. Following Tuesday’s trading, it was reported by multiple sources, including the Economic Times and Business Standard, how the overall market capitalization eroded by approximately Rs 7.37 lakh crore within this turbulent timeframe, highlighting the financial impact of these stock declines.
Performance indicators also showcased inconsistencies; for example, shares of Mahindra & Mahindra and Tech Mahindra fared slightly healthier relative to the stark declines seen across the stock spectrum. Reports suggested mixed performances within sectors, with the declining indices raising speculative dialogues about possible bargain-buying opportunities as prices fell.
Notably, the rupee took considerable hits as well, touching all-time lows against the US dollar, exacerbated by external economic pressures and substantial equity outflows. The weak rupee adds another layer of concern for import-heavy sectors and industries dependent on foreign currency transactions.
Another element bearing consequences for investors is regulatory shifts. The Securities and Exchange Board of India (SEBI) is weighing the separation of non-regulated activities from registered financial entities. These shifts are seen as attempts to protect investors and provide clearer guidelines for market artisans.
The downturn, coupled with the upcoming US elections, has created divergent prospects for businesses and individual investors alike. While larger institutions may ride out the storm, retail investors are left grappling with the fallout of substantial equity decreases. The Indian stock market's performance remains closely watched, as traders are urged to analyze market trends and foreign sentiment surrounding investments.
