It appears that bears have gained strong control over the markets, as evident from the sharp decline in the Indian benchmark indices over the last three trading sessions. The Nifty 50 extended its losing streak for the sixth straight session on Thursday and breached the crucial 19,000 mark for the first time since June 28, 2023, and in October so far, the index has lost 3.70% of its value, which is the largest monthly fall since September 2022, when the Nifty 50 tumbled 3.74%.
The Nifty 50 started its downward trend on October 17 at around 19,811 levels and dropped significantly to the current level of 18,908 (Thursday -10:AM), losing 1314 points or 4.22%, and from the all-time high of 20,222, the index is down 6.4%.
The index began today’s trading session with a sharp gap down at 19,027 levels compared to the previous closing price of 19122, and it extended the bearish trend during the early trade to hit a four-month low of 18,884, down 1.12%
Indian markets followed a drop in Asian peers after US tech stocks sank dramatically overnight amid disappointing earnings reports and surging Treasury yields. The 10-year US Treasury note rose above 4.9% for the second consecutive trade on Thursday, according to Trading Economics data.
Among the components of the Nifty 50, Adani Enterprises (down 3.2%), Tech Mahindra (down 2.8%), Mahindra & Mahindra (down 2.6%), Bajaj Finserv (down 2.5%), Hindalco Industries (down 2.1%), Bajaj Finance (down 1.9%), LTIMindtree (down 1.7%), and Eicher Motors (down 1.7%) were the top losers in the pack.
On the flip side, Axis Bank and HCL Technologies are trading in the green with a marginal gain of 0.8% and 0.1%, respectively. Among sectoral indices, Nifty Realty was the biggest laggard in today’s trade, dropping as much as 3.17%, followed by Nifty Media (down 2.6%), and Nifty PSU Bank (down 2.31%).
Even though China announced a one trillion-yuan stimulus to address its struggling economy and there was a significant drop in crude oil prices from $97 a barrel to $89 a barrel, alongside decent performances by Indian private sector banks in Q2 FY24, investors have not embraced these positive indicators. Instead, they are being overshadowed by geopolitical tensions and rising bond yields in the United States.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “There is risk-off in global equity markets triggered by a combination of economics and geopolitics. The Israel-Hamas conflict continues to be a major headwind for markets. If the conflict lingers for long it has the potential to impact global growth, too, when the global economy is already in the midst of a slowdown.”
“In the near term, however, the strongest headwind for the market is the stubbornly high US bond yields. With the 10-year bond yield at near 5%, FPIs are likely to be in the sell mode. Sectors like banking and IT, which constitute the largest segments of the AUM of FPIs, are likely to be under pressure. This will provide opportunities for long-term investors to buy quality stocks, particularly in banking, at attractive rates,” he added.
Source Link: Nifty 50 plummets 3.7% in October so far, biggest monthly drop since September 2022 | Mint