The Indian stock market faced challenges in the latest trading session, concluding on a lower note on Friday. The challenges primarily arose from declines in the automotive and banking sectors, which overshadowed minor gains made by pharmaceutical and metal stocks. As a result, the Nifty 50 index closed with a marginal decrease of 0.14% at 24,964, marking its third consecutive day below the significant 25,000 level. The Sensex followed suit, finishing down 0.28% at 81,381.
Sector Performance
Within the market, various sectoral indices exhibited mixed results. Notably, the Nifty Pharma index recorded a commendable gain of 1.19%, while the Nifty Metal index also appreciated by 0.94%. The Nifty IT index climbed 0.60%, showcasing resilience amidst a generally bearish market sentiment. Conversely, the Nifty Bank index suffered a setback, declining 0.70%, reversing the strong gains it made the previous day. The Nifty Realty index, too, experienced downward pressure, ending the session with a decrease of 0.69%.
Key Stock Movements
Examining individual stock performances, heavyweights like Mahindra & Mahindra, TCS, ICICI Bank, and Cipla all experienced declines of over 1%. In contrast, shares of Trent, Hindalco Industries, HCL Technologies, and Tech Mahindra posted gains of up to 2.4%, providing some relief amid the broader market pullback.
Market Sentiment Analysis
Market analysts, including Vinod Nair, Head of Research at Geojit Financial Services, remarked on the sideways trading pattern seen in the market. The lack of fresh catalysts for growth, coupled with a recent uptick in US 10-year yields due to rising core inflation and cautious sentiments ahead of the earnings season, has created turbulence in the market. Furthermore, ongoing geopolitical issues have prompted foreign institutional investors (FIIs) to seek more affordable markets, putting additional stress on domestic market liquidity.
Weekly Summary
This week concluded negatively for both the Nifty 50 and the Sensex, which registered losses of 0.20% and 0.40%, respectively. Concerns surrounding the Middle East conflict, ongoing FPI outflows, and high valuations further dampened investor sentiment. Notably, the Nifty 50 has corrected 3.28% in October, marking its largest monthly drop since December 2022. Both indices have seen substantial declines from recent peaks—Nifty 50 down nearly 5.34% from 26,277 and Sensex down 5% from 85,978.
Small and Mid-Cap Recovery
On a brighter note, small and mid-cap stocks have shown signs of recovery after experiencing significant downturns. The Nifty Midcap 100 index posted a gain of 1.26%, closing at 59,212, while the Nifty Smallcap 100 index increased by 1.13%, successfully reclaiming the crucial 19,000 mark at 19,008.
Currency Market Developments
This week also saw the Indian rupee reaching an all-time low, dipping below 84 against the US dollar for the first time, attributed to rising oil prices and foreign capital exits from equity markets. The currency was last reported at 84.05, having fallen from 83.9675 the previous session, surpassing its prior low of 83.9850 recorded on September 12.
Inflation and Rate Cut Speculation
The economic landscape is further complicated by inflation concerns, as September’s U.S. consumer price index unexpectedly rose, prompting discussions among investors regarding the Federal Reserve’s potential monetary policy. The core inflation figure, which omits volatile food and energy prices, increased to 3.3% year-over-year, slightly surpassing expectations. As the Fed approaches its next meeting, there is ongoing debate about the possibility of rate cuts or a pause in adjustments, given the mixed economic signals.
