Sensex and Nifty closed in the red for the fifth session on October 4 amid worries about escalating conflict in the Middle East. Banking, FMCG, and auto stocks bore the brunt of the sell-off, while IT stocks offered a brief glimmer of hope amidst the market turmoil.
At close, the Sensex was down 808 points or 1 percent at 81,688 and the Nifty was down 200 points or 0.8 percent at 25,049. About 1,521 shares advanced, 2,266 shares declined, and 101 shares remained unchanged. Sensex and Nifty logged their biggest weekly drop since June 2022. This week, Nifty fell 4.3 percent and Sensex dropped 4.5 percent.
Concerns over the escalating conflict in the Middle East have raised fears of potential disruptions to crude supplies from the top oil-producing region, pushing prices higher—a situation that impacts net importers like India. Brent Crude futures have surged over 9 percent so far in October to over $78 per barrel.
Meanwhile, FIIs are diverting funds to China following its recent stimulus measures. The last three days have witnessed FIIs selling Rs 30,614 crores in the cash market. In just a week, China-dedicated funds have seen inflows worth over $13 billion while India-dedicated funds received just $107 million, Cameron Brandt, Director of Research at EPFR Global said in an interaction with CNBC-TV18.
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"The last three days have witnessed huge FII selling of Rs 30,614 crores in the cash market. FIIs are moving money from expensive India to cheap Hong Kong on expectations that the monetary and fiscal stimulus being implemented by the Chinese authorities will stimulate the Chinese economy and improve earnings of Chinese companies," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities told Moneycontrol that given global growth concerns and geopolitical issues, volatility will remain high in sectors like IT and financial services.
Nifty Bank and Nifty FMCG extended their losing streak to a fifth consecutive session, sliding 0.6 percent and 1.6 percent, respectively. ICICI Bank and HDFC Bank led the decline in the banking sector, while ITC and HUL weighed heavily on the FMCG index.
Bucking the trend in the broader market, Nifty IT rose by 0.5 percent, driven by gains in Infosys and Tech Mahindra. As Indian IT companies prepare to report their September quarter earnings, analysts project neutral to positive results, influenced by Accenture's performance, with no negative surprises.
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Despite all the concerns, analysts are of the view that the long-term trend in Indian markets remains intact. Anirudh Garg, Partner and Fund Manager at Invasset PMS said there is a strong chance FIIs may return to Indian markets, driven by higher yields compared to developed economies and India's robust growth story.
In the broader market, BSE small- and mid-cap indices slipped nearly 1 percent each. The India VIX, a key measure of market volatility, surged over 7 percent to 14.
On the Nifty 50, M&M, Bajaj Finance, Asian Paints, Nestle, and BPCL took the hardest hit, dropping 2-4 percent. In contrast, Infosys, ONGC, HDFC Life, Tata Motors, and Wipro emerged as top gainers, climbing 0.7-1.5 percent.
Investors now await the US September's nonfarm payrolls report due to be released later in the day.
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