Sensex and Nifty Dip for Fifth Consecutive Session Amid Middle East Tensions

The Indian stock market witnessed a bearish trend on October 4, 2024, as both the Sensex and Nifty closed in the red for the fifth consecutive session. The downturn, attributed to escalating conflicts in the Middle East, raised concerns about potential disruptions in crude oil supplies from the region, impacting net importers like India.

At the close, the Sensex plummeted 808 points (1%) to settle at 81,688, while the Nifty fell 200 points (0.8%) to end at 25,049. This week alone, the Nifty has dropped by 4.3%, and the Sensex by 4.5%, marking their steepest weekly decline since June 2022. Notably, 1,521 stocks advanced, but 2,266 declined, reflecting a broad sell-off in the market.

Concerns surrounding crude oil prices intensified as Brent Crude futures surged over 9% in October, surpassing $78 per barrel. With foreign institutional investors (FIIs) shifting their focus towards China, following recent stimulus measures there, Indian markets faced substantial selling pressure. In just three days, FIIs offloaded ₹30,614 crore in the cash market, while China-dedicated funds saw inflows of over $13 billion, leaving India with only $107 million during the same period.

According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, “The last three days have witnessed huge FII selling… expectations that the monetary and fiscal stimulus in China will stimulate the economy and improve earnings of Chinese companies have led to this shift.”

Market experts predict that volatility will persist across sectors like IT and financial services due to global growth concerns and geopolitical tensions. In the banking sector, Nifty Bank and Nifty FMCG indices extended their losing streaks by 0.6% and 1.6%, respectively. Key players like ICICI Bank and HDFC Bank led the declines, while FMCG giants ITC and HUL also faced heavy losses.

However, amidst the turmoil, Nifty IT recorded a 0.5% gain, buoyed by advances in Infosys and Tech Mahindra. Analysts expect neutral to positive earnings reports from Indian IT companies as they gear up for their September quarter results.

Despite the current challenges, analysts remain optimistic about the long-term outlook for Indian markets. Anirudh Garg, Partner and Fund Manager at Invasset PMS, highlighted the potential for FIIs to return, driven by higher yields compared to developed economies and India’s robust growth story.

In the broader market, BSE small and mid-cap indices fell nearly 1% each, while the India VIX, a key volatility measure, jumped over 7% to reach 14.

Investors are now keenly awaiting the release of the US September nonfarm payrolls report, expected later today, which could further influence market movements.

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