Market Overview
The Indian stock market experienced a downward trend at the end of the week, with both the Nifty 50 and Sensex closing lower on Friday. The declines were primarily influenced by losing auto and banking stocks, despite some support from the pharmaceutical and metal sectors. The Nifty 50 fell by 0.14%, marking a continuing decline below the 25,000 threshold for the third straight day, closing at 24,964. Similarly, the Sensex saw a 0.28% drop, finishing at 81,381.
Key Triggers in Focus
As we venture into the third week of October, investors will be closely scrutinizing several crucial market triggers. These include the initial set of earnings reports for the July-September quarter of the fiscal year 2024-25 (Q2FY25), developments surrounding the Israel-Iran conflict, foreign fund outflows, fluctuations in crude oil prices, as well as both domestic and global macroeconomic data.
Market Sentiment and Performance
Throughout the week, the Nifty 50 and Sensex recorded losses of 0.20% and 0.40%, respectively. Deteriorating investor sentiment was predominantly driven by concerns about the ongoing Middle Eastern conflict, persistent foreign portfolio investor (FPI) outflows, apprehensions concerning a potential slowdown in earnings, and heightened stock valuations.
October Declines
This month, the Nifty 50 has experienced a notable decline of 3.28%, signaling its most significant monthly drop since December 2022. From a recent high of 26,277 points, the index has experienced a downturn of approximately 5.34%. Likewise, the Sensex has fallen about 5% from its peak of 85,978 points, exhibiting a 3.46% dip this month alone.
Technical Analysis
According to market analysts, the Nifty 50 initiated the week with a pronounced decline but found vital support near the Fibonacci 38.2% level. It closed down 0.20% from the previous week, with the 24,750-24,800 range serving as a crucial support level. Although still above the 21-week exponential moving average (EMA), indicating a long-term bullish trend, a significant breach of this support could escalate selling pressure towards 24,500. In contrast, resistance for the index is observed at 25,250, where buying could trigger an upward movement towards 25,600. Overall, the prevailing outlook appears to be sideways to bullish, favoring a buy-on-dips strategy.
Upcoming Financial Results
Investors are gearing up for the release of Q2 FY25 results, with key companies such as Reliance Industries, Infosys, Axis Bank, Wipro, Jio Financial Services, and HDFC Bank expected to announce their earnings shortly. The outcome of these reports will be critical in shaping market sentiment and driving sector-specific movements in the coming week.
Investor Activities
On October 11, Domestic Institutional Investors (DIIs) net purchased shares worth โน3,731 crore, while Foreign Institutional Investors (FIIs) recorded a net sell-off of โน4,163 crore, according to provisional data from the NSE. This broad trend of FII selling has been prominent throughout the month, particularly as investors shift focus towards more attractive opportunities in the Chinese market.
Global Economic Influences
In the global context, the upcoming week will carry significant implications from the Chinese Ministry of Finance regarding future stimulus measures. Positive announcements from China could drive favorable outcomes in Indian markets, while any negative news might dampen investor sentiment temporarily.
Oil Prices and Geopolitical Factors
Recent fluctuations in oil prices have garnered attention as well. While oil prices dipped on Friday, they have registered back-to-back weekly gains, driven by concerns over supply disruptions in the Middle East and changes in demand due to natural events, such as Hurricane Milton impacting Florida. Investors remain alert to geopolitical developments and their effects on economic stability.
Corporate Actions and Ex-Dividend Stocks
This coming week, several major companies are set to trade ex-dividend, including Tata Consultancy Services (TCS), Anand Rathi Wealth Ltd, and NRB Bearings Ltd. This action could influence trading patterns as investors analyze the yield prospects of these equities.
Technical Outlook
From a technical perspective, the Nifty has formed a near-term bottom around the 24,750 level. To regain upward momentum, the index must breach resistance levels at 25,330 and 25,500. Conversely, a decline below 24,750 could trigger further selling pressure, targeting levels near 24,440 and 24,100.
In the Bank Nifty, the psychological threshold of 50,000 is critical to watch, with immediate resistance at 51,700 and a significant barrier at 52,350 for any notable recovery. A fall below 50,000-49,500 could lead to additional declines, which traders will closely monitor.
