It is another day of selling in Indian equities with FIIs further selling net Rs 4,329 crore on November 4 with DIIs buying a net Rs 2,936 crore. FIIs sold a net Rs 1.14 lakh crore of Indian equities last month adding pressure to the broader market sentiment which has seen the highest monthly selling till date.
The headline NIFTY index slid below the 24,000 mark and posted an intraday low of 23,816 however settled with a minor pullback towards the 24,000 mark, still down 1.27 per cent since the previous session’s close. Almost all the sectoral indices closed on a negative note today with Realty and Oil and Gas being the major draggers loosing 2.93 per cent and 2.48 per cent, respectively. NIFTY Bank and NIFTY Auto slid 0.89 per cent and 0.98 per cent, respectively.
The broader market breadth turned negative today with over 2,000 stocks trading lower while only 581 stocks advanced on NSE. The broader NIFTY 500 index witnessed only 78 advances while 422 declines, with the index losing 1.34 per cent at close showcasing selling momentum in the Indian market.
Auto segment witnessed selling pressure today with Maruti, Hyundai, and Tata Motors reporting muted domestic wholesales in October. The country's largest carmaker Maruti said, its total domestic passenger vehicle wholesales were at 1,59,591 units last month compared with 1,68,047 units in the year-ago month, a decline of five per cent. Tata Motors reported a marginal decline in its domestic and international sales at 82,682 units in October as compared to 82,954 units in the same month last year. Total domestic sales were marginally up at 80,839 units last month against 80,825 units in the year-ago period. Overall passenger vehicle (PV) sales, including electric vehicles, were down marginally at 48,423 units over 48,637 units a year ago.
As China is slowing, the room for further monetary and fiscal stimulus is on the cards as policymakers meets this week. Chinese market as per the market cap/GDP ratio is far undervalued as compared to India. China’s market cap to GDP was around 65 per cent at the start of FY25 while India was quoting above 135 per cent showing a high valuation locally. Such high valuation and lower chance of RBI rate cuts and below-par corporate results along with geo-political tensions have led to selling in Indian equities from foreign institutional investors.
The long-term story of India is intact and after a corrective phase, Indian equities should regain. However, it is difficult to tell when the market will bottom out. A corrective phase is part and parcel of a bull market and it is a healthy sign for long-term investors. The larger index has corrected only 7-8 per cent and any correction between 10-15 per cent from the high can be counted as a healthy one. For mutual fund investors, stay invested and continue your SIP every month for a long-term investment outlook.
Market Outlook Index- For traders
The US election, China policy makers meeting and FOMC meeting are the key events this week and traders should be careful to carry forward any intraday positions.
NIFTY: The index may see further weakness when it breaks and sustains below the crucial support range of 23,750-800 exposing the 200-day EMA support around the 23,450-500 range. The intraday resistance is placed at the 24,100-150 range.
BANK NIFTY: The bank is likely to stay weak intraday below the 51,600-650 range with immediate support at the 51,000 marks. If the 51,000 support is taken out then one can expect a decline towards the 50,750-800 levels.
NIFTY MIDCAP Select Index: The index failed to hold above the 100-day EMA and slid towards its latest reaction low. The immediate support is seen at the 12,150-200 range and below that the index may slide towards the 12,070-12,000 mark. The immediate resistance is seen at the 12,350-370 range.
The report is being prepared by Bitupan Majumdar, an independent SEBI registered research analyst with registration code INH30006962. Please consult your financial advisor before taking an investment decision.
