(Photo : BT Creative)

• The Indian stock market saw a significant downturn across multiple sectors, attributed to global influences.
• Despite early losses, the market trend remained positive with more stocks trading in green.
• Market behavior is linked to the US Presidential election and escalating Middle East tensions.
• Despite volatility, market experts remain optimistic about India's long-term growth story.

The Indian stock market experienced a significant downturn in early trading on Thursday, with heavy selling observed across multiple sectors. The Sensex was trading at 79,549, a drop of over 800 points or 1 per cent, while the Nifty was trading at 24,241, also down by over 250 points or 1 per cent. This decline was seen across metal, auto, financial service, pharma, FMCG, energy, private bank, and infrastructure sectors.

Despite the early losses, the market trend remained positive. On the National Stock Exchange (NSE), 1,250 stocks were trading in green, while 999 stocks were trading in red. The Nifty Bank was at 52,061.85 after falling 255.55 points or 0.49 per cent. The Nifty Midcap 100 index was trading at 57,4.350 after rising 87.70 points or 0.15 per cent, while the Nifty Small cap 100 index was at 18,886.40 after slipping 19.70 points or 0.10 per cent.

Among the top losers in the Sensex pack were Bajaj Finserv, UltraTech Cement, Bajaj Finance, Nestle India, ICICI Bank, and Kotak Mahindra Bank. On the other hand, Tata Steel, HCL Tech, TCS, and JSW Steel emerged as the top gainers.

Impact of US Presidential Election

Market experts have attributed this market behavior to the transformative potential of Trump's victory. They noted, "With the Congress and the Senate coming under Republican control and President Trump exercising power without bothering about another term in office, hugely transformational decisions are possible in the months following Trump's assumption of office."

In the Asian markets, except for Jakarta and Tokyo, the markets of Shanghai, Seoul, Bangkok, and Hong Kong were trading in the green. The US stock market also reacted positively to Trump's victory in the US presidential election, closing in the green after a massive jump of 3.57 per cent on the last trading day.

In India, foreign institutional investors (FIIs) sold equities worth Rs 4,445 crore on November 6, while domestic institutional investors bought equities worth Rs 4,889 crore on the same day. This indicates a significant shift in the investment patterns, reflecting the changing market dynamics.

Geopolitical Tensions and Market Performance

The Indian stock market has been underperforming in October with Nifty down 5.7 per cent when markets in the US and Japan have delivered positive returns and China and Hong Kong have hugely outperformed. This underperformance has been attributed to the massive, sustained, and unprecedented selling by the FIIs, which has touched Rs 98,085 crore this month up to October 24. The consensus downward revision in the FY25 earnings estimate and the weak Q2 numbers have soured the sentiments to a slightly bearish mode.

The recent market downturn has been driven by escalating tensions in the Middle East, where the conflict between Iran and Israel has intensified. Several other factors apart from geopolitical concerns have contributed to the market crash, such as rising crude oil prices, regulatory changes in the F&O segment by SEBI, and outflows from foreign institutional investors (FIIs).

The situation worsened after Iran launched around 180 ballistic missiles at Israel, causing Brent crude prices to spike from $71 to $75 per barrel. Fears are mounting that Israel could retaliate by targeting Iran's major oil fields, which would likely push oil prices even higher. This presents a significant concern for India, which imports 80 per cent of its oil. Any substantial increase in oil prices would raise India's import costs, adding more pressure to the country's economy.