Mumbai: The Sensex on Friday dropped nearly 445 points, while Nifty fell below the cushy 24,000-mark as the Indusland Bank, Mahindra & Mahindra, L&T and ICICI Bank dragged Indian indices down on October 25, 2024. Reliance Industries, HDFC Bank, SBI and NTPC further drove the market down on Friday.
Among broader indices, the Nifty Auto, Bank, Metal, PSU Bank, Realty and Consumer Durables indices were down 2 per cent to 3.6 per cent driven by a disappointing Q2 result season led by private lender Induslnd Bank and power company NTPC. The market capitalisation of all the companies listed on the BSE plunged Rs 9.8 lakh crore to Rs. 435.1 lakh crore on Friday. The benchmark BSE Sensex fell 663 points, or 0.83 per cent, to end the day below the 80,000 mark at 79,402.
Meanwhile, the broader NSE Nifty was down 218 points, or 0.9 per cent to 24,108 at the end of Friday’s trading session. Both benchmarks are trading 8 per cent lower than the high points of September 27, 2024, and are on par to deliver their worst performance so far since March 2024.
What are the key factors that the stock market down?
Weak Q2 earnings
The BSE Sensex faced immense pressure on the back of poor Q2 performance by blue chip companies and other industries. IndusInd Bank’s share price was down by 18.5 per cent on Friday, plunging the Sensex to decline 136 points, while NTPC’s share price plunged 3 per cent.
FII selling
Foreign institutional investors (FIIs) sold off vast chunks of Indian stock holdings in 19 straight sessions, to reinvest in China seeking higher returns on investment. China’s recently announced stimulus package is expected to buoy the markets making Chinese equities and bonds more attractive for investment. FIIs sold off shares worth Rs 98,085 crore as of October 2024.
Higher bond yields and stronger US dollar
The 10-year Treasury yield trickled down to 4.1801 per cent on Friday, after a four-point decline in the previous session. However, the Treasury yield remained over 4 per cent throughout Friday’s session, after touching a 3-month high of 4.26 per cent on Wednesday.
The dollar index, which measures the greenback against 6 major peers, showed little changes during Thursday’s session though retreating from Wednesday’s 3-month peak of 104.57. The index rose 0.56 per cent during the week. A strong US dollar and rising US bond yields have an adverse effect on Indian equities.
US presidential polls
The US presidential contest between former US President Donald Trump and current US Vice President Kamala Harris has left investors feeling uncertain about the future of the US and global economy. Expectations of Trump’s triumph have led to an increased support for US Treasury yields and the greenback.
Fading prospects for aggressive rate cuts
Markets expect a 25-basis point cut at the US Federal Reserve’s November meeting while anticipating low chances of the US central bank maintaining interest rates steady, as per a report by CME’s FedWatch Tool.
