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Informist, Monday, Nov. 4, 2024

By Alina Geogy

MUMBAI – Caution ahead of the presidential elections in the US pushed the domestic benchmark indices sharply down and closer to three-month lows Monday, analysts said. The uncertainty about the outcome of the US elections and what it could mean for the US Federal Reserve's monetary policy decision later this week played on the minds of investors. This added to the underlying concerns that market players have been dealing with for a while now – heavy sales by overseas investors, an escalation in conflict in West Asia which led to a rise in crude oil prices, and the recent disappointments in September quarter earnings – and this aggravated the selling. These together took the Nifty 50 below the psychological level of 24000 points, and ensured it remained below this crucial support level even at the close of trade.

Nervousness ahead of the US elections is the key reason for the selling in the market, as people are scared of what the results might be, Nirav Harish Chheda, technical and derivatives analyst at Nirmal Bang Institutional Equities, said. Analysts are now increasingly of the view that there will be some challenges for India regardless of which party wins the race, particularly with concerns about rising inflation and deficits irrespective of whether Donald Trump or Kamala Harris wins.

Losses in shares of index heavyweights Reliance Industries, HDFC Bank, ICICI Bank, and Bharti Airtel dragged the indices down as much as 2% during the day. Among these, shares of mega-cap Reliance Industries fell as much as 4% to a nine-month low before closing down nearly 3%. However, buying in public sector bank stocks and some information technology stocks in the last few hours of the session helped the indices come off intraday lows.

The Nifty 50 closed at 23995.35 points, down 1.3%, with over 40 stocks in the index ending with losses. The BSE Sensex closed at 78782.24 points, down 1.2%. At its lowest level, the Nifty 50 was down 488.20 points or 2% from Friday. At its closing level, it is 309 points above the low of the day.

The growing concern among investors was also evident in the sharp rise in the India VIX, the fear gauge of the market. The India VIX ended up 5% at 16.70 after rising nearly 11% to a two-month high of 17.60. The broad market also bore the brunt of the sell-off. The Nifty small-cap indices ended down around 2% each, while the Nifty mid-cap ones ended down around 1%. All sectoral indices ended in the red, with Nifty Realty falling nearly 3% to become the worst hit among these. Nearly three-fourths of all stocks traded on the NSE ended with losses.

Among sectors, shares of automobile companies were down sharply tracking the fall in the overall market and muted vehicle sales in October. Shares of Hero MotoCorp and Bajaj Auto closed down 4.3% and 3.6%, respectively, and were the worst performers in the Nifty 50 index. Losses in these shares dragged the Nifty Auto index down 1%. On the other hand, shares of Mahindra & Mahindra closed higher by over 2% after it reported the highest-ever monthly automobile sales on strong growth in its sport utility vehicle despatches and exports in October.

Shares of oil marketing companies came under selling pressure tracking the rise in crude oil prices. Prices of crude oil rose after the Organization of the Petroleum Exporting Countries Sunday said it would extend production cuts and on news reports that Iran may be planning another major strike on Israel, which would threaten to disrupt crude flows from the region. Shares of oil marketing companies Bharat Petroleum Corp. and Indian Oil Corp. fell 3.1% and 4.2%, respectively. The December contract of Brent crude on the Intercontinental Exchange traded over $75 per barrel, up nearly 3%.

Shares of Sun Pharmaceutical Industries fell more than 5% to a two-month low and were among the worst hit in the Nifty 50. The launch of the company's drug Leqselvi, used to treat alopecia areata, is expected to be delayed after the US District Court of New Jersey granted US-based pharmaceutical company Incyte's request for a preliminary injunction against its launch. While Sun Pharma said it will immediately appeal against the court's decision, the injunction technically prevents the company from launching Leqselvi until the court subsequently rules in its favour or till the expiry of Incyte's 335 patent in December 2026, Emkay Global Financial Services said in a report.

Shares of Afcons Infrastructure, an infrastructure engineering and construction firm, closed 2.4% higher at INR 474.20. The stock had listed at INR 426 on the NSE, a discount of 8% to the issue price of INR 463.

* Of the Nifty 50 stocks, 8 rose and 42 fell

* Of the Sensex stocks, 6 rose and 24 fell

* On the NSE, 723 stocks rose, 2,147 fell, and 75 were unchanged

* On the BSE, 1,324 stocks rose, 2,756 fell, and 119 were unchanged

* Nifty Realty: down 2.9%; Nifty Energy: down 2.6%; Nifty IT: down 0.03%

BSE                                               NSE

Sensex: 78782.24, down 941.88 points or 1.18%     Nifty 50: 23995.35, down 309 points or 1.27%

End

Edited by Ashish Shirke

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