Indian Stock market heading for correction? FIIs rush to China

The Indian market is entering a correction phase, driven by the withdrawal of foreign investors, rising crude oil prices, impending assembly election results, and tomorrow’s monetary policy announcement. Crude oil has recently surpassed $81 per barrel. The US market experienced a 1% decline last night, contributing to a bearish sentiment.

In the derivatives market, the Gift Nifty closed at 24,895 on Monday night but has since dropped to 24,865, indicating a likely significant loss for the Indian market at the opening today.

Global market scenario

European markets ended slightly higher on Monday, contrasting with the US markets, which saw the Dow Jones Industrial Average fall by 398.51 points (0.94%) to close at 41,954.24. The S&P lost 55.13 points (0.96%) to finish at 5,695.94, while the Nasdaq declined by 213.95 points (1.18%) to close at 17,923.90. The negative sentiment was further fueled by expectations that the September jobs report will deter the US Fed from further interest rate cuts and the increase in crude oil prices.

In Asia, many markets are also experiencing losses today. Japan’s Nikkei fell by 0.75%. Conversely, after a 10-day holiday, the Chinese market surged 10% upon reopening. The Hong Kong Hang Seng index briefly surpassed 23,000, marking its highest point since February 2022, but has since declined by 2%.

The Indian market experienced a drop of approximately 1% on Monday, continuing its downward trend for the sixth consecutive day. The Sensex closed down 638.45 points (0.78%) at 81,050.00, while the Nifty lost 218.85 points (0.87%) to finish at 24,795.75. The mid-cap and small-cap indices also saw significant declines, with both falling over 2%.

The overall market sentiment is increasingly bearish, exacerbated by geopolitical tensions, fears of price hikes due to rising crude oil prices, and political uncertainties. Foreign investors sold a net of Rs 8,293.41 crore on Monday, contributing to total net sales of Rs 39,673.71 crore over the past four days. In contrast, domestic institutional investors purchased a net Rs 13,245.12 crore.

Gold and Silver

Gold prices fell by 0.40% to close at $2,643.10 per ounce on Monday and dipped to $2,639 this morning. In Kerala, gold prices decreased by Rs 200, bringing the rate to Rs 56,800. Silver also experienced a decline, falling to $31.60 per ounce.

Currency and crude oil trends

The dollar remained stable, with the index closing at 102.54 on Monday and slightly declining to 102.40 this morning. The Indian rupee struggled to maintain its value, closing at a record high of Rs 83.98 against the dollar.

Crude oil prices surged by 4% yesterday, with Brent crude closing at $81.14. As of this morning, it has adjusted to $80.68, while WTI crude is at $76.90 and UAE's Murban crude is priced at $80.45. Market analysts are anticipating an escalation of tensions in the West Asian region, which may further influence oil prices.

Overall, the market is facing heightened volatility and uncertainty, with Nifty finding support at 24,705 and 24,600, while resistance levels are noted at 25,050 and 25,155. 

Cryptocurrencies are experiencing a downturn, with Bitcoin trading above $62,500 while Ether has fallen below $2,440.

In the industrial metals market, most prices have risen, excluding aluminum and lead. Copper increased by 0.20% to $9,816.25 per tonne. Conversely, aluminum and lead both declined by 0.39%. Other metals also saw decreases: zinc fell by 0.32%, nickel by 1.56%, and tin by 0.85%.

Key indices:

Sensex                 30   81,050.00   (-0.78%)
Nifty                      50   24,795.75   (-0.87%)
Bank Nifty                   50,478.90    (-1.91%)
Mid Cap              100   57,300.20    (-2.01%)
Small Cap           100  18,242.85     (-2.75%)
Dow Jones           30   41,954.24     (-0.94%)
S&P                      500  5,695.94      (-0.96%)
Nasdaq                        17,923.90    (-1.18%)

Currency and commodity:

Dollar ($): 83.98 (+₹0.01)
Dollar Index: 102.54 (+0.05)
Gold (oz): $2,643.10 (-$11.20)
Gold: ₹56,800 (-₹200)
Crude (Brent): $81.14 (+$3.00)