Stock Market Analysis: Sep 30 - Oct 4, '24
Weekly Indian Stock Market Analysis covering Market Performance, Key Highlights, Sectorial Performance, Government Policy and Expert Analysis
The Indian stock markets experienced significant volatility during the week of September 30 to October 4, 2024. The BSE Sensex and Nifty 50 indices faced substantial declines, primarily influenced by rising geopolitical tensions in the Middle East and profit-booking activities.
Market Performance Overview
The Indian stock markets had a volatile week between September 30 and October 4, 2024. Both the Nifty 50 and the Sensex showed mixed performance due to global and domestic factors. The Nifty closed at 25,014 on October 4, down by 0.93% from the previous day, continuing a general downward trend seen through the week. Similarly, the Sensex also dipped by around 1%(India Today)(mint).
Despite this, energy stocks, particularly Coal India, emerged as top performers, and mid-cap and small-cap sectors continued to outperform large caps(India Today). The banking sector saw some traction after the Reserve Bank of India (RBI) announced it would end the Incremental Cash Reserve Ratio (I-CRR) policy by October 7, 2024, injecting liquidity back into the system(India Today).
Day Wise Analysis
- September 30: The Sensex plunged by 1,272 points (1.49%) to close at 84,299.78, while the Nifty 50 fell by 368 points (1.41%) to 25,810.85. This marked one of the worst trading days in nearly two months due to escalating tensions in West Asia and profit-taking after recent highs 1 3.
- October 1-3: The downward trend continued, with the Sensex dropping further due to ongoing concerns about geopolitical instability and rising crude oil prices. By October 3, the Sensex had fallen by 1,769 points (2.1%) to close at 82,497, wiping out a significant amount of market capitalization. 5 6
- October 4: The markets showed slight recovery attempts but closed lower again; the Sensex fell by 808 points (0.98%) to end at 81,688.45, while the Nifty closed at 25,049.85, down by 200 points (0.79%) amid persistent selling pressure. 2 6
Sector-wise Performance
- Energy & Power: Companies like Coal India benefited from rising domestic demand, with power sector stocks seeing significant gains.
- Banking: Stocks surged after the RBI’s decision on liquidity policies.
- Public Sector Enterprises (PSEs): Public sector stocks, led by energy and railway companies, continued their upward momentum, with reports of collaboration talks with the U.S. and Saudi Arabia giving a further boost.
Key Factors Influencing Market Performance
- Geopolitical Tensions: The conflict between Iran and Israel escalated, leading to fears of supply disruptions from the Middle East, which significantly impacted investor sentiment and contributed to rising oil prices5.
- Crude Oil Prices: Brent crude surged by $5.5 per barrel during this period, raising concerns about inflationary pressures in India as crude oil is a major component of the country's import bill25.
- Profit Booking: After a period of gains, investors engaged in profit-booking, particularly in sectors that had performed well earlier in the month34.
Government Policies & Regulations
- RBI’s I-CRR Withdrawal: One of the most significant developments this week was the Reserve Bank of India's announcement that the temporary I-CRR, introduced to manage surplus liquidity, will be phased out by October 7. This move is aimed at easing liquidity conditions in the banking system(mint).
- Market Reforms: There were no major policy shifts affecting the broader stock market this week, but continued regulatory oversight in sectors such as banking and energy helped bolster confidence among institutional investors.
Expert Insights & Analysis
Industry experts have indicated that this week’s underperformance, especially in large caps, can be linked to global economic concerns such as rising U.S. bond yields, concerns about oil prices, and global inflation fears(India Today)(Investing.com India).
However, India’s resilient domestic growth outlook and solid FII (Foreign Institutional Investor) inflows keep the long-term market trajectory positive.
Future Outlook
Looking ahead to the next month:
- Analysts predict that if geopolitical tensions stabilize and oil prices do not escalate further, there could be a rebound in market sentiment.
- Key support levels for Nifty are expected around 24,800, with resistance seen at 26,000. Investors are advised to remain cautious but alert for potential buying opportunities if markets show signs of recovery.
Conclusion & Outlook for October
Looking ahead, the markets are expected to remain volatile with global macroeconomic factors, such as rising U.S. interest rates, playing a crucial role. On the domestic front, analysts are optimistic, particularly for sectors like banking, energy, and infrastructure, which should benefit from policy support and continued demand growth(TradeBrains). Investors should watch for upcoming earnings reports, which will likely dictate market movements in the near term.
Predicted Trend for October
The market is likely to experience consolidation in the short term with mid- and small-cap stocks continuing to outperform. Long-term investors may find opportunities in sectors such as banking, energy, and public enterprises as these continue to show strength. However, cautious optimism is advised due to global market uncertainties.
Further Reads
TOI Business Desk
Team BL
Navdeep Singh
