MUMBAI: Uncertainties stemming from the Trump vs Harris cliffhanger in the US weighed on investors’ minds globally on Monday, including those on Dalal Street, and pulled down the leading indices as foreign investors continued to sell risky assets, including stocks of emerging markets like India. As a result, the sensex cracked nearly 1,500 points mid-session to close 942 points lower, at 78,782 — a 3-month closing low.
On NSE, Nifty also followed a similar trajectory and closed 309 points lower at 23,995, its first close below the 24k mark in three months. Weak corporate earnings for the July-Sept quarter that are trickling in, are also weighing on investor sentiment, market players said.
The sell-off in the market left investors poorer by Rs 5.4 lakh crore, with BSE’s market capitalisation at Rs 449.8 lakh crore, official data showed.
Fund managers and brokers are keeping a close watch on the outcome of the US election. Most say a win for the Republican candidate Donald Trump could lead to heightened market volatility globally. They, along with economists, are also worried about the high level of deficit in the world’s largest economy which, if left unchecked, could cause severe uncertainty.
“Markets are worried about the US not bringing its fiscal deficit in check,” Anish Tawakley of ICICI Prudential Mutual Fund, said. “Consequently, US bond yields have been rising. This could put pressure on equity (markets) globally.” On Monday evening, the US 10-year bond yield was hovering around the 4.29% level, a four-month high mark. This came despite a sharp 50 basis points (100 basis points = 1 percentage po int) rate cut by the US central bank on Sept 18 this year.
In India, foreign funds continued their recent aggressive selling trend and took out a net Rs 4,330 crore from the stock market, data on BSE showed. Since Oct, foreign portfolio investors have net sold Indian stocks worth a little more than Rs 1 lakh crore. On Monday, for the first time since May this year, FPIs turned net sellers for 2024, combined data from NSDL and BSE showed.
In the next few weeks, for domestic market players the monitorable factors are the state elections in Maharash tra and Jharkhand, the govt capex which has considerably slowed in recent months compared to last year and the urban consumption trend, which had supported economic growth while rural consumption remained muted.
“Urban consumption, which had previously remained resilient, is also showing signs of slowing, adding to the pressure, especially as lower to middle-income households have already been under stress,” said Vinit Sambre of DSP Mutual Fund. “Heavy rains have been partly blamed for the slowdown, making it crucial to monitor the pace of recovery. If growth fails to pick up, it could pose further risks to both earnings and market performance.”
In Monday’s market, though, selling was across the board, with sectoral indices representing real estate, oil & gas and utilities losing the most while IT stocks were mostly resilient.
