Post-Diwali Blues: Sensex and Nifty Dip Ahead of US Elections Other key factors include market attempts to break the negative momentum, dissatisfaction with the recent correction, and the Indian rupee hitting an all-time low of INR 84.1050 against the dollar
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The Indian stock market slumped as BSE Sensex and NSE Nifty traded at INR 78,473.36 and INR 23,832.95, respectively.
On Monday, Sensex opened at INR 79,713.14 against a previous close of INR 79,724.12 while Nifty 50 opened at INR 24,315.75 against its previous close of INR 24,304.35. Reliance Industries, ICICI Bank and Infosys contributed most to the index fall.
The two benchmarks crashed almost two per cent each and saw BSE Midcap and Smallcap indices plunge up to two per cent. The overall BSE market capitalization dropped to nearly INR 439 lakh crore, making investors incur a loss of INR nine lakh crore in a single session.
On September 27, Nifty 50 and Sensex reached a record high of INR 26,087 and INR 85,462, respectively.
There are several reasons for driving the Indian stock market down today, including the US presidential elections.
1. Market reaction to the upcoming US election
The domestic market is reacting to the US election-related nervousness. The opinion polls are indicating a tough fight between Democratic candidate Kamala Harris and Republican Donald Trump. The New York Times reported a national polling average of 49 per cent and 48 per cent between Harris and Trump.
Elections in the US will be held on November 5.
2. US Federal Reserve's policy outcome
The outcome, scheduled for November 7, is expected to see a 25-basis-point rate cut. However, it's unlikely to move the market, due to already being priced in.
"Largely, the expectation is that the US Fed will go for a 25 bps cut, but all that could get negated because both the candidates of the US election are talking of a good amount of spending, so the fiscal deficit is going to be higher, which is why bond yields have jumped higher. This is not great news for the market," said Pankaj Pandey, the head of research, ICICI Securities according to Live Mint.
3. Weak Q2 numbers
India Inc.'s September quarter results failed to meet expectations, raising investor concerns about the market outlook.
"The Indian market is facing headwinds from decelerating earnings growth. Nifty's FY25 EPS growth as indicated by Q2 results may dip below 10 per cent in FY25, which will render the present valuations of about 24 times estimated FY25 earnings, difficult to sustain. FIIs may continue to sell in this difficult earnings growth environment, constraining any rally in the market," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Tata Motors, Tata Steel, M&M, Trent, and SBI are among 170 companies to announce earnings. Q2 results this week.
Other key factors include market attempts to break the negative momentum, dissatisfaction with the recent correction, and the Indian rupee hitting an all-time low of INR 84.1050 against the dollar.
