Indian stock markets opened lower on Friday, extending losses for the fifth consecutive session as geopolitical tensions in the Middle East and significant foreign institutional investor (FII) selloff weighed on sentiment. The benchmark Sensex opened at 82,244.25, down from its previous close of 82,497.10, while the Nifty mirrored this trend.

As of 9.30 am, top gainers on the NSE included ONGC (0.68 per cent), SBI Life (0.68 per cent), IndusInd Bank (0.45 per cent), HCL Tech (0.36 per cent), and TCS (0.24 per cent). Meanwhile, BPCL (-3.93 per cent), Bajaj Finance (-3.06 per cent), Trent (-2.80 per cent), Asian Paints (-2.59 per cent), and Hero Motocorp (-2.17 per cent) were among the top losers.

The market’s downward trajectory was largely attributed to the ongoing conflict between Iran and Israel, which has led to a surge in crude oil prices. Brent crude jumped more than 5 per cent on Thursday, marking its biggest rise in a year. This development has raised concerns about potential inflationary pressures in India, a major oil importer.

Deepak Jasani, Head of Retail Research at HDFC Securities, commented on the global factors influencing the markets: “US stocks closed lower on Thursday, but off the session’s lows, as traders monitored developments in the Mideast conflict and awaited a monthly jobs report in the US on Friday.”

The heavy selling by Foreign Institutional Investors (FIIs) has been a significant factor in the market’s recent performance. Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted: “The last three days have witnessed huge FII selling of ₹30,614 crores in the cash market. FIIs are moving money from expensive India to cheap Hong Kong on expectations that the monetary and fiscal stimulus being implemented by the Chinese authorities will stimulate the Chinese economy.”

Narinder Wadhwa, Managing Director at SKI Capital Services Ltd, highlighted the multiple challenges facing the Indian markets: “The ongoing Iran-Israel conflict is creating significant ripples in global markets, leading to a surge in crude oil prices. For India, which relies heavily on oil imports, this rise in crude prices is concerning. It could exert upward pressure on inflation, widen the fiscal deficit, and limit the RBI’s flexibility to adjust monetary policy.”

The technical outlook remains cautious. Shrikant Chouhan, Head of Equity Research at Kotak Securities, stated: “We believe the weak sentiment will continue as long as the market trades below 25500/83200. On the downside, it could slip to 25150-25025/82200-82000 or even the 50-day SMA.”

Vikas Jain, Head of Research at Reliance Securities, provided insight on key support and resistance levels: “NIFTY-50 has witnessed a vertical fall from its inside range, and we could expect some bounce from the support of 25,050 levels which is the 50-day average and round number support.”

Investors are closely watching the US nonfarm payrolls report due later today, which could provide further insights into the Federal Reserve’s interest rate policy. This data, along with ongoing geopolitical developments, is expected to influence market sentiment in the coming days.

The volatility in the market is reflected in the India VIX, which was up 9.86 per cent yesterday and is currently trading at 13.1700. Hardik Matalia, Derivative Analyst at Choice Broking, advised caution: “Traders are advised to be cautious and maintain strict stop-loss levels. Additionally, it is recommended to avoid carrying any long positions overnight to mitigate potential risks from market volatility.”

As the market navigates through these challenging times, investors are advised to remain vigilant and monitor both global and domestic developments closely.

Published on October 4, 2024