New Delhi: The decline in local stock markets continues. There were clouds of disappointment on Monday for the sixth consecutive trading session. The 30-share BSE Sensex fell 638.45 points, or 0.78 percent, to close at 81,050. At one time during trading it had gone down to 962.39 points. Similarly, Nifty of National Stock Exchange (NSE) also fell by 218.85 points or 0.87 percent to reach 24,795.75 points. This decline in the market is due to the fear of increase in crude oil prices due to tensions in West Asia and the attitude of foreign investors towards China. Before this, the domestic stock market was busy running at a gallop. According to experts, the Indian market is in despair amid the rising prices of crude oil and capital flow in cheap markets like China. He expressed fear that the market will remain cautious due to geopolitical tensions and fear of FII selling. Let us take a look at the key factors that will determine the future course of Dalal Street:
1. Attitude of foreign institutional investors (FII)
The game of ‘buy China, sell India’ is going on in emerging markets. FIIs have sold Indian shares worth about Rs 30,718 crore in the first 3 days of October. According to Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, Hong Kong’s Hang Seng Index has risen 26% in the last month. This momentum is expected to continue. The reason is that the valuation of Chinese shares is very low. The monetary and fiscal incentives being implemented to revive China’s economy are expected to have a good effect.
2. Global Market
The Dow Jones Industrial Average recorded a record closing high on Friday. The Nasdaq Composite Index closed up more than 1%. The better-than-expected employment report reassured investors who were worried the economy might weaken too much. The report showed that the increase in jobs in America in September was the highest in six months. The unemployment rate dropped to 4.1%.
3. Crude oil
Brent crude has increased by more than 8% on a weekly basis. This is the highest in a week since January 2023 due to the growing threat of region-wide war in the Middle East. The rise in crude oil is bad news for India as it is an additional burden on the import bill.
4. Election
Market watchers will also keep an eye on the results of the assembly elections to be held in Haryana and Jammu and Kashmir. If exit polls are to be believed, Congress can return to power in Haryana. At the same time, there can be a hung assembly in Jammu and Kashmir.
5. Technical Factors
“This has been one of the sharpest weekly declines in recent times with Nifty closing at the 50-EMA support,” said Rajesh Bhosale, Equity Technical Analyst at Angel One. It is forming a strong bearish candle on the weekly chart, indicating further downside. However, traders should exercise caution with short positions.
6. RBI policy
The Reserve Bank of India (RBI) is likely to keep the benchmark repo rate unchanged in its upcoming policy review to be announced on October 9. It is expected to be maintained at 6.5% in the ninth consecutive meeting in August 2024. Analysts say that if oil prices continue to rise, RBI may further delay cutting the policy rate keeping inflation in mind.
7. Second quarter results
September quarter earnings season begins this week. It will start with companies like TCS, Tata Elxsi, DMart and IREDA. This will also have a role in deciding the direction of the market.