The week from October 14 to October 18, 2024, saw Indian equity markets fluctuate amid global and domestic cues. Both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) faced turbulence due to a mixture of inflation concerns, geopolitical tensions, and quarterly earnings reports. Let’s dive deeper into the performance of the indices and key factors that shaped market behavior.
NSE: Nifty 50 Wobbles, Bears Take Control
The NSE’s benchmark index, Nifty 50, had a volatile week, experiencing downward pressure for most of the trading sessions. Opening at around 19,550 on October 14, the index fell by 1.6% over the week, closing at 19,240 on October 18.
Key factors contributing to the dip:
- Global Inflationary Pressures: Persistent inflation in global markets, especially the U.S. and Europe, spooked investors. The U.S. Federal Reserve’s hawkish stance led to uncertainty about interest rates, dragging down Indian equities.
- Weak Corporate Earnings: While some sectors, such as IT, outperformed expectations, weak results in FMCG and financials weighed heavily on investor sentiment.
- FII Outflows: Foreign institutional investors (FIIs) were net sellers throughout the week, contributing to the market’s weakness. They offloaded equities worth ₹6,100 crore as risk aversion prevailed.
Despite a bearish undertone, sectors like IT and Pharma saw buying interest, thanks to the weakening rupee, which made export-oriented companies more attractive.
BSE: Sensex Drops Amid Global Concerns
The BSE Sensex mirrored the performance of Nifty 50, albeit with marginally less volatility. Opening at 65,550 on October 14, the Sensex closed at 64,920 by the week’s end, registering a 0.96% decline.
Highlights of Sensex performance:
- Geopolitical Tensions: The ongoing Middle East conflict between Israel and Hamas caused uncertainty in energy markets, raising concerns about higher crude oil prices. India, being a major importer, saw a rise in its oil import bill, further impacting market sentiment.
- Mid and Small Caps Hit Hard: While the large-cap stocks managed to withstand much of the selling pressure, the mid and small-cap segments saw steeper declines, with the BSE Midcap and Smallcap indices falling by 2.4% and 2.9%, respectively.
- Currency Woes: The Indian rupee depreciated by nearly 0.8% against the U.S. dollar, putting additional pressure on import-dependent sectors like automotive and chemicals.
Sectoral Performance: IT Shines, FMCG Slips
Sector-wise, IT and Pharma were the standouts. The Nifty IT Index was one of the few sectors to close in the green, gaining 1.8% over the week, driven by favorable demand outlooks from Western markets and a weak rupee supporting revenue growth. However, the Nifty FMCG Index fell by 2.3%, as companies cited concerns over rising input costs and slower volume growth.
The banking sector also struggled, with the Nifty Bank Index losing 1.9%. Major private sector banks such as HDFC Bank and ICICI Bank saw moderate sell-offs following muted quarterly results, which failed to excite investors.
Macro Indicators: Inflation and Trade Deficit Woes
India’s CPI inflation for September was reported at 5.02%, down slightly from August but still elevated, keeping pressure on the Reserve Bank of India (RBI) to maintain its policy stance. Additionally, India’s trade deficit widened to $24.3 billion in September, driven by higher crude oil prices and a weaker rupee, which unnerved investors about the country’s external sector stability.
FII and DII Activity: Domestic Institutions Stabilize Markets
FIIs were net sellers throughout the week, pulling out significant funds as global risk factors overshadowed local growth prospects. However, domestic institutional investors (DIIs) helped cushion the fall, purchasing equities worth ₹5,800 crore, thereby providing some much-needed support to the market.
Conclusion: Volatility to Persist
Looking ahead, volatility is likely to persist as global inflationary pressures, geopolitical tensions, and domestic earnings continue to drive market sentiment. Investors will be watching for policy cues from central banks and the upcoming festive season sales, which could provide some relief for consumer-driven sectors.
Both the NSE and BSE will likely remain range-bound in the near term, with the potential for further corrections if the macroeconomic situation worsens.
