Last week, the BSE benchmark gauge Sensex fell 1,906.01 points or 2.39 percent. (Representative Image)
Foreign investors’ trading activity and global trends will be key driving factors for equity markets in the coming holiday-short week, according to analysts.
Trading holiday for Maharashtra assembly elections
Leading stock exchanges BSE and NSE have declared a trading holiday on November 20 for assembly elections in Maharashtra.
Election Schedule
Elections to the 288-member state assembly will be held on November 20 and counting of votes will take place on November 23.
Impact of elections and global indices on markets
“Indian stock markets will be closed on Wednesday, November 20 in view of the Maharashtra assembly elections. Election results will be important in shaping market direction, along with key global economic indicators including US bond yields, dollar index performance, US jobless claims, flash manufacturing and services PMI data and Japanese inflation data.
FII Activity and Emerging Market Dynamics
“Post-election high US bond yields and a strengthening dollar have impacted emerging markets like India and FII (foreign institutional investors) activity is a major factor influencing Indian equities in the near term,” Pravesh Gaur, Senior Technical Analyst, Swastik Investsmart Ltd., said.
Other major market influencers
Movements in global oil benchmark Brent crude and rupee-dollar trend will also influence market trading, experts said.
Focus on short-term trading week and FII flows
“This week has also been shortened due to holidays, and with the earnings season largely over, the focus will shift to FII inflows. Foreign institutional investors have been selling continuously for the past one and a half months. Additionally, traders will keep a close eye on global market trends,” said Ajit Mishra – SVP, Research, Religare Broking Ltd.
Recent market performance
Last week, the BSE benchmark gauge Sensex fell 1,906.01 points or 2.39 percent.
Equity markets were closed on Friday on the occasion of Guru Nanak Jayanti.
Fall from record high
The BSE benchmark lost a massive 8,397.94 points or 9.76 per cent from its all-time high and the Nifty also shed 2,744.65 points or 10.44 per cent from a record high.
The Sensex touched its record high of 85,978.25 on September 27 this year and the NSE Nifty also touched a record high of 26,277.35 on the same day.
Factors behind market volatility
The sharp drop in benchmark indices is attributed to foreign investors fleeing the domestic market, due to weak Q2 earnings and higher equity valuations.
Market remains volatile due to sluggish Q2 results, rising dollar index and continued FII selling over the last one-and-a-half months, said Siddharth Khemka, Head-Research, Wealth Management, Motilal Oswal Financial Services Ltd.
FPIs are on sale
So far this month, foreign investors have taken Rs. 22,420 crore has been withdrawn, attributed to higher domestic stock valuations, increased allocation to China and higher US dollar and Treasury yields.
With this sell-off, Foreign Portfolio Investors (FPIs) have so far in 2024 totaled Rs. 15,827 crore recorded an outflow.
According to the data, FPIs have collected Rs. 22,420 crore recorded a net outflow. This October Rs. 94,017 crore followed by a net withdrawal, which was the worst ever monthly outflow.
Earlier, FPIs in March 2020 from equity raised Rs. 61,973 crore was withdrawn.
In September 2024, foreign investors will invest Rs. 57,724 crore had invested nine months high.
Eight of the top 10 most-valued firms have a makeup of Rs. 1.65 lakh crore takes a hit
Eight of the top 10 most valuable companies lost market valuations of Rs. 1,65,180.04 crore in losses, with HDFC Bank and State Bank of India the worst hit due to weak trend in equities.
HDFC Bank is valued at Rs. 46,729.51 crore reduced to Rs. 12,94,025.23 crores.
The market valuation of State Bank is Rs. 34,984.51 crore down to Rs. 7,17,584.07 crores.
Reliance Industries remained the most valuable domestic company, followed by TCS, HDFC Bank, ICICI Bank, Bharti Airtel, Infosys, State Bank of India, ITC, LIC and Hindustan Unilever.