Market blues hit Dalal Street as Sensex and Nifty see sharp fall

The Indian stock market faced a rocky start to the week as key indices Sensex and Nifty plunged over one percentage point on Monday, 4 November.

Amid widespread global uncertainties, Nifty 50 and Sensex posted notable losses, with the Nifty hitting a five-month low after slipping close to 10 per cent from its all-time peak of 23,995.35.

Investors experienced significant losses — totalling Rs 5.99 lakh crore — as the BSE Sensex fell by more than 1 per cent. The decline was largely driven by foreign institutional investors (FIIs) selling approximately Rs 1.14 lakh crore in the cash market, adding pressure on the prices.

At the close of trade, the Sensex was down by 941.88 points, or 1.18 per cent, settling at 78,782.24, while the Nifty lost 314 points, or 1.29 per cent, closing at 23,990.30. Market breadth remained negative, with 2,603 shares declining and only 1,279 advancing, while 135 remained unchanged.

Energy stocks led the day’s losses, with the Nifty Energy index falling by 2.72 per cent, closely followed by the Nifty Realty and Nifty Infra indices, which dropped 2.9 per cent and 2.2 per cent, respectively.

The India VIX, an indicator of market volatility, surged by 5.03 per cent to 16.70, reflecting elevated levels of investor anxiety and uncertainty.

Analysts attributed Monday's slide to a combination of global events and economic signals. The upcoming US presidential election on 5 November, paired with the Federal Reserve's anticipated monetary policy announcement on 7 November, have weighed on investor sentiment, especially after weaker-than-expected US non-farm payroll data was released.

Adding to the concerns are tepid quarterly earnings from Indian companies and geopolitical tensions, which have made investors increasingly cautious.

“Indian markets, trading at high valuations, were vulnerable to a correction amid these headwinds,” noted Vishnu Kant Upadhyay, AVP of research and advisory at Master Capital Services Ltd. He added that the possibility of delayed US election results has only deepened investor unease.

India’s equity markets, which have been underperforming compared to global counterparts due to high valuations, could therefore see further declines.

According to Vinod Nair, head of research at Geojit Financial Services, “Volatility is likely to persist in the short term, with the focus shifting to the US presidential election. Additionally, key economic developments like the Federal Reserve and Bank of England's policy decisions will be pivotal in determining market trends.”

On the technical front, experts observed that Nifty remains below its 100-day exponential moving average (EMA), a bearish sign for the market. According to Upadhyay, this week will be crucial, as Nifty holding above the 23,500-mark could indicate a potential buying opportunity.

“If Nifty manages to stay above 24,500, it may trigger short-covering, signalling a possible reversal. However, a decisive break below the 23,500–23,400 zone could drive the market down further toward 22,800,” he said.