The Indian stock markets opened lower on Tuesday, extending losses for the seventh consecutive session as geopolitical tensions in West Asia and concerns over potential delays in interest rate cuts by the US Federal Reserve dampened investor sentiment.

The benchmark Sensex opened at 80,826.56, down from its previous close of 81,050.00, while the broader Nifty50 index started the day at 24,832.20, slightly up from Monday’s close of 24,795.75.

“The trend of the Nifty remains weak and sell-on-rise behaviour may be witnessed for some more time, although as the short-term trend has become oversold, a bounce can be expected any time,” said Deepak Jasani, Head of Retail Research at HDFC Securities.

The ongoing conflict between Israel and Hamas continues to cast a shadow over global markets. Oil prices surged on Monday, with US crude jumping more than 3 per cent as traders braced for potential disruptions in supply. However, crude futures edged lower in early Asian trading on Tuesday as investors booked profits.

“US crude oil jumped more than 3 per cent on Monday, as the market waited for Israel to strike Iran,” noted an analyst. The West Texas Intermediate November contract was trading at $75.86 per barrel, down 1.66 per cent in early trading.

The technology sector faced significant pressure, with major US tech companies experiencing a sharp sell-off on Monday. This downturn was further exacerbated by regulatory challenges, with Google’s parent company Alphabet Inc. facing an order to restructure its Android app store.

Foreign institutional investors (FIIs) continued their selling spree, offloading equities worth ₹8,293.41 crore on October 7, while domestic institutional investors bought shares worth ₹13,245.12 crore, according to provisional data.

“FIIs have pulled out over ₹37,000 crore in the last six sessions, deepening the negative mood,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd.

Investors are closely watching for several key events this week, including the release of US Federal Reserve meeting minutes on Wednesday and US consumer price index data on Thursday. These releases could provide crucial insights into the Fed’s future monetary policy decisions.

“Focus will also be on a press conference from China’s National Development and Reform Commission due at 0200 GMT, for further details around the stimulus pledges that drove the market frenzy,” an analyst added.

In the domestic market, the Reserve Bank of India’s Monetary Policy Committee outcome, expected on October 9, will be a key focus for investors.

Sector-wise, metal stocks faced significant selling pressure in early trade. Tata Steel emerged as the top loser on the Nifty, falling 3.63 per cent, followed by Tata Motors (-3.12 per cent) and JSW Steel (-2.34 per cent). On the gaining side, Ultratech Cement led with a 1.62 per cent increase, followed by Hindustan Unilever (1.33 per cent) and M&M (1.31 per cent).

Gold and silver prices eased as US Treasury yields extended gains on Monday. “The US 10-year Treasury Yields settled above 4 per cent for the first time since 31 July 2024 as investors readjusted their views for the path of interest rates from the Federal Reserve,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.

Market analysts advise caution in the current volatile environment. “It is advisable to take one step at a time as the week is going to be eventful, with the MPC meeting followed by the commencement of quarterly earnings,” suggested Sameet Chavan, Head Research, Technical and Derivative at Angel One.

As geopolitical tensions persist and economic uncertainties loom, investors are advised to maintain a cautious stance and closely monitor global developments that could impact market dynamics in the coming days.

Published on October 8, 2024