Monday Mayhem: Nifty, Sensex plunge 1% on profit-booking, tepid Q2 earnings; eyes on Fed meet

The markets globally are focused on the US presidential elections and analysts believe that there could be a near-term volatility in response to the election outcome.

Monday blues turned Dalal Street red as the bear grip tightened with Nifty 50 and Sensex plunging over a percent, kicking off the week on a weak note. Nifty prices have now dropped nearly 10 percent from all-time highs, hitting a five-month low on heavy sell-offs from FIIs which offloaded around Rs 1.14 lakh crore in the cash segment.

At close, the Sensex was down 941.88 points or 1.18 percent at 78,782.24, and the Nifty was down 314.00 points or 1.29 percent at 23,990.30. About 1,279 shares advanced, 2,603 declined, and 135 remained unchanged.

Sectorally, the Nifty Energy index suffered the most, plummeting by 2.72 percent. Other sectors also experienced notable drops, with Nifty Realty and Nifty Infra falling 2.9 percent and 2.2 percent, respectively.

In contrast, the India VIX, a measure of market volatility, surged by 5.03 percent to 16.70, signalling heightened investor anxiety and uncertainty in the market.

Today's sell-off was driven by several factors, including the U.S. presidential election on November 5, the Federal Reserve’s upcoming monetary policy announcement on November 7, and recent disappointing U.S. nonfarm payrolls data. Investor sentiment has also been strained by weak quarterly earnings and geopolitical uncertainties.

With Indian markets trading at high valuations, these headwinds worked as key catalyst to trigger the ongoing correction, according to Vishnu Kant Upadhyay, AVP - Research and Advisory at Master Capital Services Ltd. Concerns about a potential delay in the U.S. election results have further fueled anxiety among investors.

Fundamental view

As expected, India is underperforming its global peers due to excess valuation. The ongoing selloff has deepened by weak Q2 earnings, dampening investor sentiment.

"Continued volatility is anticipated in the short-term, as attention shifts to the closely contested US presidential election. Additionally, key economic events, such as the US Fed and BoE policy decisions, will be critical in shaping market movements," said Vinod Nair, Head of Research, Geojit Financial Services.

Technical View

"Technically, the market remains well below its 100-day EMA, adding to the bearish outlook. This week will be critical, a hold above 23,500 could indicate bargain buying, while a sustained move above 24,500 may trigger short covering, signaling a possible end to the downtrend," said Upadhyay.

"Conversely, a decisive break below the 23,500–23,400 range could push prices further down toward 22,800," he added.

Bank Nifty also witnessed a sharp decline today. However, it stayed within the broad range 52,000 – 51,000. "The index is likely to trade within a range of 52,500 – 50,500 and trade with a negative bias. Crucial support is placed at 50,720 – 50,600 while resistance is placed at 51,750 – 51,800," said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas, for your reference.

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