Sensex down by over 900 points, Nifty tanks 300 points ahead of US election results

It was an all-red show on both the bourses today, with Sensex tanking 941.88 points to close the day at 78,782.24 points. Nifty followed suit, dipping around 309 points to close at 23,995.35 points, hitting a 4-month low.

India VIX, which gauges volatility and fear prevalent in the market, rose by over 5% during the day. Out of the 50 stocks in Nifty, 42 declined during the day, while 8 advanced. A similar bloodbath was seen on Sensex, which saw only 6 of its constituents inch up today, while another 24 dipped by as much as 3%.

Says Aditya Gaggar, Director of Progressive Shares, “The bears dominated today's trade. In the opening trade itself, the index breached its psychological support of 24,000 with ease and continued to trade lower; however, in the last trading session, a meaningful recovery was seen that helped the index to settle the trade at 23,995.35 points.”.

“All the sectors ended the day in red, with Realty (down by 2.93%) and Energy (down by 2.48%) being corrected the most. In the broader markets, the disparity was observed where the midcap moved in line with the frontline index while small-caps underperformed.”

Amidst broader indices, the midcap 100 fell by 1.26%, while the smallcap 100 index dipped by 1.97%. Other smallcap indices, specifically the smallcap 50 index, fell by over 2% today.

Clearly, the markets are on tenterhooks ahead of the US presidential election results due tomorrow and the US Fed’s meeting, scheduled for November 7, 2024.

While it remains too close a call to declare anyone a straight winner at the moment, polls suggest that Donald Trump is ahead of Kamala Harris in all 7 swing states (Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin). Both Trump and Harris are set to close their campaigns today with rallies in Pennsylvania.

It is largely believed that results in these states will be instrumental in deciding who makes it to the White House this time around. The FII exodus and weak corporate Q2 earnings are further pushing the Indian market down.

In November so far, FIIs have offloaded Rs 211.93 crore in the cash segment Indian markets. DIIs (domestic institutional investors), which had been net buyers in October, making purchases worth Rs 1,07,254.68 crore, also turned net sellers during the first 4 days of November, selling off Rs 377.33 crore in the cash segment so far

Says Lemonn’s Gaurav Garg, “From a fundamentals perspective, Indian market outlook in the short term remains weak as Q2 earnings disappointed while valuations are still not in an attractive zone despite the ~8% climbdown from all-time highs hit in late September. On a 12-month forward P/E basis, Nifty 50 is still trading at 21.2x, at about 15.7% premium to its 10-year average of 18.3x. FII selling remained a key factor even after record outflows of 1.14 lakh crores in October. Global markets are bracing for volatility post-US elections, and we are seeing the impact of these safe haven flows ahead of the event.”

The Indian markets are also bracing for a 25-basis point rate cut by the US Federal Reserve on November 7, 2024. Per the CME Fed Watch, a staggering 98.1% believe that a 25 basis point reduction in interest rates is on the cards.

Osho Krishan, Senior Analyst, Technical & Derivatives, Angel One Ltd. notes that the US election, which is due in a day, is likely to raise the volatility bar and needs to be tracked closely for the intermediate trend analysis. “For now, one must stay light on positions as India VIX heads northward to the 17-odd zone and maintain a stock-centric approach," he adds.