Investors eye China amid uncertainty. Core sector production falls

Foreign investors shifting from India to China, and the escalating conflict in West Asia pulled the Indian market down yesterday. The situation remains unchanged even today, with uncertainty prevailing in the market. The Indian market will remain closed tomorrow on account of Gandhi Jayanti.

However, the record highs of the US markets and today's Japanese market recovery bring hope for a relief rally. The US Federal Reserve Chairman hinted at reducing interest rates twice by a quarter percent this year, offering some reassurance to the bulls.

Meanwhile, a decline in India's August core sector production and a current account deficit of 1% could weigh on the market.

In the derivatives market, GIFT Nifty closed at 25,984 on Monday, reaching 26,005 this morning before fluctuating. Indications are that the Indian market will open with minor gains today.

European markets fell on Monday, with the German index down by 0.76% and the French index losing 2%. Auto stocks saw a major decline, with Italy's Stellantis dropping 14.7%.

The US markets ended in the green on Monday after some fluctuations, with both the Dow Jones and S&P closing at record highs. Federal Reserve Chairman Jerome Powell's statement that rates would continue to be lowered helped boost the market. However, predetermined cuts are not expected, and rates will be decided based on economic trends. Powell indicated the possibility of two more cuts this year.

In September, the Dow rose by 1.9%, S&P by 2%, and Nasdaq by 2.7%. For the third quarter, the Dow saw an 8% increase, S&P gained 5.5%, and Nasdaq rose by 2.6%. Companies like 3M and IBM surged by 33% and 27%, respectively, in this period, while PayPal and Tesla rose by 34% and 31%.

On Monday, the Dow Jones index climbed 17.15 points (0.04%) to close at 42,330.15, while the S&P gained 24.31 points (0.42%) to close at 5,762.48. The Nasdaq index closed with a gain of 69.58 points (0.38%) at 18,189.17.

US futures are down this morning, with the Dow down by 0.15%, S&P by 0.16%, and Nasdaq by 0.15%.

The yield on US 10-year Treasury bonds fell to 3.78%.

Asian markets are mixed today. After a 5% drop yesterday, Nikkei rose by 2% today. The newly appointed Prime Minister's support for increasing interest rates is the major topic in Japan. A 4.9% decline in August's industrial production weighed down the Japanese market yesterday.

On the other hand, the Chinese market made a record surge of 8% yesterday, following a 15.7% rise last week, the biggest rally since November 2008. The market has turned bullish, and foreign funds that exited a few months ago are now returning in large numbers. The Chinese market remains closed today.

Indian markets

The Indian market, which opened on Thursday with minor losses, continued to decline, ending with a 1.5% loss. The sharp decline was due to foreign investment funds shifting from India to China after the sudden surge in the Chinese market.

Foreign investors sold ₹9,791.93 crore worth of stocks in the cash market yesterday, while domestic funds and institutions bought ₹6,645.80 crore worth of shares. The drop in the Japanese market and heightened war concerns in West Asia are also among the reasons for the decline.

NSE and BSE increased fees for derivative trading and revised fee structures, potentially leading discount brokers to raise rates.

Mid-cap and small-cap stocks did not see a significant decline yesterday, which is noteworthy.

On Monday, 1,154 stocks rose while 1,668 declined on NSE. On BSE, 1,749 stocks gained while 2,306 fell.

Sensex dropped by 1,272.07 points (1.49%) on Monday,to close at 84,299.78. Nifty fell by 368.10 points (1.41%) to end at 25,810.85. Bank Nifty lost 1.59% (856.20 points) to close at 52,978.10.

The mid-cap index fell by 0.38% to 60,153.80, while the small-cap index dropped by 0.32% to 19,179.65.

All sectors, except metals and media, declined yesterday. Auto stocks saw significant losses ahead of the release of September's sales data today, with Hero MotoCorp and TVS Motors dropping by 4%.

Shakti Pumps, which is preparing to issue five bonus shares per share, rose by 5% yesterday. Kirloskar Brothers' stock climbed by 6.22%.

Zee Media surged by 10% yesterday, with the stock rising by 60% in just five days. Following a strong brokerage report, AstraZeneca's stock jumped by up to 12%.

The market's bullish sentiment has weakened, but the Nifty held above the 25,800 support level, offering some hope to the bulls. The next support level is at 25,500, while resistance will be at 26,000.

Today, Nifty has support at 25,780 and 25,705, with resistances at 26,050 and 26,125.

Decline in core sector production

In August, production in the eight core sector industries declined by 1.8%, marking the first drop in 42 months. In July, there was a growth of 6.1%.

Production of electricity, refinery products, coal, cement, crude oil, and natural gas fell. Government officials attributed the decline to the base effect, as last August saw a 13.4% growth. However, the fact that production is lower than in previous months contradicts this argument.

The core sector accounts for 40% of the industrial production index. The new data suggests that industrial production growth will be limited to 1%.

Gold slips further

Profit-taking dragged down gold again. On Monday, it closed at $2,635 per ounce, rising to $2,637 this morning.

In Kerala, gold prices dropped by ₹120 yesterday to reach ₹56,640 per sovereign. Prices are expected to decline further today.

Silver prices dipped slightly, reaching $31.21 per ounce.

The dollar is rising again. The dollar index closed at 100.78 on Monday and rose to 100.84 this morning.

The Indian rupee weakened again, with the dollar gaining nine paise to close at ₹83.79 on Monday.

Crude oil prices dipped slightly, with Brent closing at $71.77, WTI at $68.34, and UAE's Murban crude at $73.11.

Cryptocurrencies declined, with Bitcoin falling below $63,500 and Ether at $2,625.

Base metals ended Monday in mixed directions. Copper fell by 1.57% to $9,691.84 per ton, and aluminium dropped by 1.39% to $2,609.89 per ton, while zinc, tin, and nickel rose by 0.98%, 2.73%, and 2.10%, respectively. Lead fell by 1.24%.

Market Summary (Monday, 30 September 2024)

Sensex 30: 84,299.78 (-1.49%)
Nifty 50: 25,810.85 (-1.41%)
Bank Nifty: 52,978.10 (-1.59%)
Mid Cap 100: 60,153.80 (-0.38%)
Small Cap 100: 19,179.65 (-0.32%)
Dow Jones 30: 42,330.15 (+0.04%)
S&P 500: 5,762.48 (+0.42%)
Nasdaq: 18,189.17 (+0.38%)
USD ($): ₹83.79 (+₹0.09)
Dollar Index: 100.78 (+0.40)
Gold (ounce): $2,635.00 (-$23.90)
Gold (sovereign): ₹56,640 (-₹120)
Crude (Brent) Oil: $71.77 (-$0.54)