India's stock markets were in a free fall on Monday as investors remained cautious at the start of a busy week that will see US Presidential Elections on Tuesday, followed by interest rate decisions by major central banks, including the Federal Reserve and the Bank of England.
The BSE Sensex was down 1,267 points or 1.6 per cent at around 78,457.19 level in noon trading, while the NSE Nifty 50 shed 427 points or 1.8 per cent to 23,877. Of the 30-share Sensex, only three stocks—Mahindra & Mahindra, Tech Mahindra and HCL Technologies—traded in the green.
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Sun Pharma and Reliance Industries led the losers; both stocks were down 4.2 per cent and 3.2 per cent, respectively. Among other major losers, Adani Ports was down 3 per cent, NTPC declined 2.9 per cent, and Tata Motors traded 2.6 per cent lower. JSW Steel, Tata Steel, Bajaj Finserv and Power Grid were also down around 2 per cent.
There are currently multiple uncertainties that seem to be playing in investors' minds. The United States goes into Presidential elections later on Tuesday. It is still uncertain who will win the elections. However, analysts have said that a victory for Republican candidate Donald Trump or Democratic candidate Kamala Harris could lead to very different outcomes for global trade, economy, and, in turn, capital markets.
The US Federal Reserve is also meeting later this week. After slashing interest rates by an outsized 50 basis points in its previous meeting, the central bank is expected to cut rates further by 25 bps this time around and another 25 bps in December. The Bank of England is also expected to cut its interest rate on November 7.
Last month, China announced a slew of stimulus measures in a bid to lift its sluggish economy. According to reports, China's National People's Congress standing committee is scheduled to meet from November 4 to November 8, which will also be closely watched for further details on the stimulus measures.
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Nervousness also prevailed as crude oil prices rose following the decision by OPEC+ countries to delay plans to increase output by a month yet again. Rising oil prices are not a good sign for major importers like India. Geopolitical tensions in West Asia also continue to weigh on investors, and people are watchful on if and how Iran responds to Israel.
Domestically, investors are also worried about a slowdown in urban consumption in certain pockets, such as fast-moving consumer goods, while food inflation remains a concern. The Reserve Bank of India's monetary policy committee, which meets in December, will be keeping a close watch on how the growth and inflation dynamics pan out. While most analysts were expecting the RBI to start cutting interest rates from the December policy meeting, some feel it will hold on to rates till it has inflation firmly at around the targeted 4 per cent, and a rate cut now is not a given.
Amid the various uncertainties and the stimulus in China, foreign portfolio investors pulled out more than Rs 94,000 crore from India's stock market in October, NSDL data showed, leading to markets correcting around 8 per cent from their peak.
After a stellar run in stock markets (Sensex and Nifty gained over 20 per cent in Samvat 2080), market experts have said that investors will have to temper their returns expectations this year in the backdrop of the uncertainties and expensive valuations in various pockets of the market.
