Today, the Indian stock market had a huge selloff. The Nifty 50 and Sensex both dropped by around 2%. The market capitalisation fell by Rs 9 lakh crore as a result of the 2% drop in mid- and small-cap indices.
On Monday, November 4, the Indian stock market saw a huge sell-off, with mid-cap and small-cap groups falling more than 2% and benchmarks, the Sensex and Nifty 50, falling around 2%.
Compared to its previous closing level of 79,724.12, the Sensex started at 79,713.14 and fell by about 2% to settle at 78,232.60. The Nifty 50 fell 2% to close at 23,816.15 after opening at 24,315.75 relative to its previous closing level of 24,304.35.
But the BSE smallcap and midcap indices had a 2% drop. Investors lost around Rs 9 lakh crore in a single session as the total value of BSElisted companies fell from Rs 448 lakh crore to almost Rs 439 lakh crore.
Today’s sectoral indices
Sectoral indices saw declines of two to three percent for Nifty Oil & Gas, Media, Consumer Durables, and Realty, and one percent for Nifty Bank, Auto, FMCG, Metal, and PSU Bank.
Before the US elections, use caution.
The anxiety around the US election is causing the market to react. Opinion polls show a close race between Republican Donald Trump and Democrat Kamala Harris, raising questions about the result of the election.
Markets all over the world will be following the US presidential election over the next few days, and there may be shortterm volatility in response to the election’s outcome,” stated VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. This will probably not last long, though, since market patterns will be impacted by economic fundamentals including US growth, inflation, and Fed regulations.
valuations still uncomfortable
Experts do not believe that the valuation situation is any better despite the recent drop. The current price-to-earnings (PE) ratio of the Nifty 50 is 22.7, which is higher than the two-year average of 22.2 and almost identical to the one-year average of 22.7, according to the equity research platform Trendlyne.
In the words of Pankaj Pandey, Head of Research at ICICI Securities, “The broad market’s multiples have not changed much as a result of the recent correction. India will continue to have strong future growth and business-friendly conditions. Due to the excessive number of stock-specific corrections, things are much better on a stock-by-stock basis.
The Fed Factor
Experts expect a 25 basis point rate drop in the US Federal Reserve’s policy announcement on November 7. However, as the market is currently reacting to this, there will not be any significant modifications.
“It is generally predicted that the US Fed would cut by 25 basis scores,” Pandey added, “but all of this can be dismissed because both of the rivals. for the US election are talking about good spending, which might lead to a larger budget deficit and a higher bond yield. The market will not be happy by this.
Weak second quarter figures
Investors’ fears about the market have been increased by the September quarter results of the Indian industry, which came in under predictions.
“Commodities have been a bit in need, which affects the general market sentiment at the moment,” Pandey said.
As noted by Vijayakumar, “A slowdown in earnings growth is posing problems for the Indian market. It will be hard to stay at the existing cost of about 24 times FY25 projected revenue if Nifty EPS (earnings per share) growth falls below 10 percent in FY25, judging from the second quarter data. In this climate of slow earnings growth, FIIs can keep selling, which could hinder any market uptrend.
Strong selling by
Foreign portfolio investors (FPIs) are selling strongly in the Indian stock market, and domestic institutional investors (DIIs) are also showing care in light of this week’s big global events.
After a week of consolidation, decline in the Nifty and Sensex has resumed, largely due to strong selling by FIIs,” stated Santosh Meena, Research Head at Swastika Investmart. Expectations of another stimulus package from China are pulling money out of India and into China, while FIIs are booking profits in advance of the next US elections. Plus, it seems that DIIs ignore these major world events.