During an erratic session In intraday trades on Monday, the NSE's Nifty50 dropped 244 points, or 0.97 percent, at 24,770 levels, while the BSE Sensex surged up to 962 points, or 1.17 percent, to 80,726.06 levels. Nonetheless, the markets began the day in green this morning but quickly lost all of their gains as they plunged into deep red.
Due to substantial selling by international investors seeking for cheaper markets like China and Hong Kong, as well as the ongoing conflict between Israel and Iran, the benchmarks declined along with the bourses' persistent deterioration.
The BSE Sensex was dragged down on Monday by index heavyweights like as HDFC Bank, Reliance Industries, NTPC, Axis Bank, and Larsen & Toubro. NTPC saw the most severe decline, plunging as much as 4%, while Adani Ports was the biggest loser on the Sensex, also seeing an intraday decline of 4%.
With the exception of Nifty, which surged 0.47 percent intraday, other sectoral trends were trading in the negative. Nifty Metal lost 2.44 percent intraday, the second-lowest after Nifty Media, which fell more than 3 percent. APL Apollo Tubes, National Aluminium, Hindalco, NMDC, Adani Enterprises, Hindustan Zinc, Hindustan Copper, SAIL, and Welspun Corp are among the metal companies that had intraday losses ranging from 3 to 6 percent.
Other industries that had intraday declines of more than 1% to 2% included Nifty PSU Bank, Private Bank, Financial Services, Consumer Durables, and Oil & Gas. Benchmarks suffered less than the wider markets, as seen by the BSE SmallCap index, which fell 3.86 percent intraday at 53,784.53. The BSE MidCap index on the other hand plummeted by 2.61 per cent at 46,653.6 intraday
Smallcaps have historically underperformed benchmarks every three years, according to experts. However, the previous five years have been different, as the index has continued to outperform the benchmarks. The G Chokalingam, Founder and CEO at Equinomics Research Pvt Ltd, stated that a reversal of this tendency is currently apparent.
"Small size stocks often become overpriced following a two- to three-year surge, which causes declines and underperformance. We're seeing this pattern emerge once more, as it has in previous cycles," according to Chokalingam.
Additionally, he made it clear that, in the near future, he believes small and mid-cap stocks would perform worse than large-cap stocks for at least the next three to six months. This aligns with past patterns and rational market behavior.
"The market's overvaluation is mostly to blame for the drop we are currently seeing. Although the continuous conflict acts as a catalyst, the market was bound to adapt eventually," according to Chokalingam. In addition to the current conflict, FIIs are now big sellers of Indian stocks, withIn addition to the ongoing conflict, FIIs have started selling Indian equities aggressively, as seen by the Nifty's 4.5% drop last week.
"The significant FII selling in the cash market, which reached Rs 40,509 crores over the past four days, is the primary cause of this abrupt drop. The FII onslaught was borne mostly by leading large caps, such as RIL, HDFC Bank, and ICICI Bank, who have significant stakes in the AUM of FIIs. Given these firms' reasonable prices and promising futures, long-term investors should take advantage of this correction. Fund-rich DIIs will keep purchasing cheap quality companies, according to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Technical View
Technical experts claim that there is a short-term negative trend in the Nifty 50 Index. However, the index is reaching a solid support zone at 24,800, where traders and investors can start searching for opportunities to accumulate holdings. For those trading on the short term in particular, this level is anticipated to offer a strong foundation for a possible comeback. The index may enter an oversold area below 24,800, which might stretch all the way to 24,400.
When the index hits these support zones, a bounce is anticipated, thus these levels offer a large buying opportunity. Resistance on the upward is anticipated at 25,150, 25,375, and 25,800, according to independent market expert Ravi Nathani.
Global Markets
The decline in Indian stocks coincides with a stellar performance by Asian counterparts, with broad-based Topix climbing 1.68 percent and Japan's Nikkie rising 1.80%. Australia's ASX/200 was up 0.68 percent, and South Korea's Kospi increased by 1.58%. The Hang Seng index had a 1.60 percent boost in Hong Kong.
Prior to the week-long holiday that began on October 7 for the Chinese mainland markets, China's CSI 300 increased by 8.48% on September 30, 2024. As of right now, trading on the Chinese exchanges will begin on Tuesday, October 8.
