The 30-share BSE benchmark Sensex fell 663 points, or 0.83%, to close at 79,402. Meanwhile, the broader NSE Nifty decreased by 218 points, or 0.9%, finishing at 24,180. Both the benchmarks are down about 8% from record highs hit on September 27 and are on track for their worst monthly performance since March 2020.
The market capitalization of all listed companies on the BSE decreased by Rs 6.03 lakh crore to Rs 437.76 lakh crore.
IndusInd Bank, Mahindra & Mahindra, Larsen & Toubro, and Reliance Industries collectively contributed 418 points to today’s decline in the Sensex. Additionally, NTPC, HDFC Bank, State Bank of India, Infosys, and Bajaj Finance also experienced losses.
On the sectoral front, Nifty Auto, Media, Metal, PSU Bank, Oil & Gas, and Consumer Durables fell over 2% each. Meanwhile, the fear gauge India VIX jumped 4.74% to 14.63.
IndusInd Bank, M&M, L&T, and ICICI Bank dragged the Sensex 445 points lower. Reliance Industries, HDFC Bank, SBI, and NTPC also contributed to the decline.On the sectoral front, Nifty Auto, Bank, Metal, PSU Bank, Realty, and Consumer Durables fell by 2% to 3.6%. Meanwhile, the fear gauge India VIX jumped 5.9% to 14.8.Key factors behind today’s market selloff
1) Weak Q2 earnings
Benchmark indices came under pressure as several blue-chip and other companies reported disappointing Q2 results, leaving investors dissatisfied. In Friday’s trading, IndusInd Bank fell 18.5%, contributing 136 points to the Sensex’s loss, while NTPC dropped 3%. Both blue-chip stocks declined following disappointing quarterly results.
“The consensus downward revision in FY25 earnings estimates and the weak Q2 numbers have soured sentiment, shifting it to a slightly bearish mode,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
2) FII selling
Foreign investors have offloaded Indian shares for the past 19 sessions, redirecting funds to China due to Beijing’s stimulus measures and relatively cheaper valuations.
This correction is attributed to sustained selling by foreign institutional investors (FIIs), which reached Rs 98,085 crore by October 24.
3) High bond yields and strong dollar
The 10-year Treasury yield ticked down to 4.1801% on Friday, following a four-basis-point decline in the previous session. However, it remains elevated above 4%, having touched a three-month high of 4.26% on Wednesday.
Meanwhile, the dollar index, which measures the currency against six major peers, was little changed at 104.03 after retreating from Wednesday’s three-month peak of 104.57. For the week, it has advanced by 0.56%.
Rising U.S. bond yields and a stronger dollar are generally negative for the Indian equity market, as they can trigger foreign fund outflows and increase import costs, ultimately impacting corporate earnings.
4) US election
The looming US election adds to the uncertainty, with former Republican President Donald Trump and Democratic Vice President Kamala Harris engaged in a tight race for key competitive states ahead of the November 5 voting day.
Meanwhile, rising speculation of a Trump win in certain betting markets has supported US yields and the dollar in recent days, driven by the Republican candidate’s inflationary tax and tariff policies.
5) Fading prospects for aggressive rate cuts
Markets are currently pricing in a 95.1% chance of a 25-basis-point cut at the Fed’s November meeting, with a 4.9% probability of the US central bank holding rates steady, according to CME’s FedWatch Tool.
A month ago, the market was fully pricing in a cut of at least 25 basis points, with a 58.2% chance of a 50-basis-point cut.
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