The Indian equity markets opened with significant losses on October 4, 2024, as the escalating conflict between Israel and Iran, along with their allies, caused widespread investor unease.
The Nifty 50 index dropped by 116.25 points, down 0.46%, and was trading at 25,124.20. Similarly, the S&P BSE Sensex witnessed a sharp decline of 337.53 points or 0.41%, standing at 82,121.89 as of 09:30 IST.
The global situation, particularly in the Middle East, has contributed to a weakening sentiment in equity markets worldwide.
Investors are seeking safer assets amidst concerns that the ongoing conflict could further strain oil supplies and inflation, leading to economic slowdowns globally. Rising crude oil prices and inflationary pressures are also adding to the bearish sentiment in the Indian market.
The Indian stock market, heavily influenced by these global cues, is mirroring this fear, as both domestic and foreign investors are rethinking their positions. While the Nifty IT index was the only sector to remain in the green, all other major indices were trading in the red.
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Broader Market Performance: Small-Cap and Mid-Cap Struggle
The broader market indices, often viewed as indicators of investor sentiment towards smaller and mid-sized companies, also underperformed the frontline indices. The S&P BSE Mid-Cap index fell by 1.37%, and the S&P BSE Small-Cap index declined by 1.43%.
This underperformance is a sign that investor confidence is waning, especially in riskier assets like small and mid-cap stocks, which are more susceptible to volatility during periods of global uncertainty.
Market Breadth:
| Category | Figures |
|---|---|
| Advances | 1,285 |
| Declines | 1,368 |
| Unchanged | 109 |
The market breadth, a critical indicator of market health, remained negative, with 1,285 stocks advancing and 1,368 stocks declining on the BSE. This suggests that the bearish sentiment was widespread across the market, with more stocks seeing price drops than gains.
Sectoral Highlights: IT Shines, Others Struggle
Among the key sectors, the Nifty IT index emerged as the only positive performer, driven by stable demand for technology services and a weakened rupee, which tends to benefit IT exporters. However, the relief in the IT sector was not enough to offset losses in other sectors, particularly in financials, infrastructure, and energy.
Notable Stock Performances:
- Bajaj Housing Finance rose 0.54%, buoyed by strong growth in its assets under management (AUM), which stood at ₹1.03 Lakh crore in Q2 FY25, reflecting a 26% YoY increase.
- Bank of Baroda saw a rise of 0.96% as the bank reported a 12.5% YoY growth in its domestic advances, which reached ₹9.39 Lakh crore.
Despite the challenges posed by global events, these companies have shown resilience due to strong fundamentals, and they may continue to outperform in the near future if the situation stabilizes.
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Technical Analysis: What’s Next for Nifty and Sensex?
Market analysts have expressed concern over the near-term outlook for Indian indices, particularly the Nifty 50. According to technical analysis, the formation of a long bear candle on the daily chart suggests further downside risk. This bearish pattern is typically indicative of sustained selling pressure, and with the Nifty 50 trading below the critical 25,150 level, more weakness is anticipated.
Key Support and Resistance Levels:
- Support Zone: Analysts point to 25,100 as a key short-term support level, with further downside potential towards 24,800, particularly if selling pressure persists.
- Resistance Levels: On the upside, the 25,500 mark serves as a major resistance, and a breach above this level could offer some relief to bulls.
As per Chandan Taparia of MOFSL, the Open Interest (OI) data suggests a broader trading range between 24,800 to 25,800, with put writing seen at the 24,000 and 25,000 strikes, indicating some level of support around these zones.
What to Expect Going Forward?
Given the global geopolitical landscape and its impact on market sentiment, investors should remain cautious. The ongoing conflict in the Middle East poses a significant risk to global oil supplies, inflation, and economic stability. Moreover, rising crude oil prices could further dampen the performance of sectors like energy and infrastructure in the coming days.
However, there are some key support zones that traders can watch for potential short-term bounces. A test of the 24,800 level could see a reversal if global sentiment stabilizes or if there is any positive news on the geopolitical front.
