Volatile Day on Dalal Street: Sensex Surges
On Friday, Dalal Street experienced significant volatility, with the Sensex fluctuating over 2,100 points during intraday trading. The index ultimately closed at 82,133 points, marking a gain of 843 points and reaching a two-month high. This surge was primarily driven by strong foreign fund buying, which amounted to ₹2,335 crore, according to data from the Bombay Stock Exchange (BSE).
The trading session began on a cautious note, with the Sensex opening slightly lower at 81,212 points. However, it quickly faced a sharp decline, dropping to a low of 80,083 points due to aggressive selling. Following this downturn, a robust recovery took place, propelling the index to an intraday peak of 82,214 points before it settled just below that mark, reflecting a 1% increase for the day.
Factors Influencing Market Movements
Siddhartha Khemka, head of research at Motilal Oswal Financial Services, noted that the recovery was supported by buying in key sectors such as Fast-Moving Consumer Goods (FMCG), Information Technology (IT), and banking stocks. Despite this rebound, broader market sentiment remained cautious. The initial selloff in Indian equities was influenced by weakness across Asian markets, which experienced steep losses amid a stronger dollar and rising US Treasury yields. Additionally, ongoing skepticism regarding China’s economic recovery weighed heavily on market sentiment, particularly affecting metal stocks in India.
Market players are still uncertain about the sustainability of foreign fund buying in the short term. The surge in US Treasury yields has dampened expectations for significant Federal Reserve rate cuts in the near future. Furthermore, the Indian rupee hit a new low of ₹84.88 per dollar, pressured by a strong dollar, foreign institutional investor (FII) outflows, and rising crude oil prices. Investors are now looking ahead to key economic indicators, including the manufacturing and services Purchasing Managers’ Index (PMI) for both the US and India, as well as domestic Wholesale Price Index (WPI) inflation data set to be released on Monday.
Market Performance and Investor Wealth
At the close of trading, 26 out of the 30 Sensex stocks recorded gains. However, in the broader market, declines outnumbered advances, with 2,173 stocks falling against 1,818 that rose, according to BSE data. The day’s trading session added approximately ₹6.4 lakh crore to investors’ wealth, bringing the total market capitalization of the BSE to ₹467.3 lakh crore.
The short-term trajectory of the market will depend on a variety of domestic and global factors. Shrikant Chouhan, head of equity research at Kotak Securities, highlighted that despite an adverse base effect, the Index of Industrial Production (IIP) growth for October 2024 improved slightly to 3.5%, up from 3.1% in September. Key areas of focus for investors will include the impact of US economic policy, recovery in domestic consumption and investment, and Consumer Price Index (CPI) inflation trends over the coming months.
Future Outlook and Political Considerations
Looking ahead, market players are also keeping an eye on the potential implications of Donald Trump’s upcoming presidency in the US, set to begin in January. The new administration’s policies could significantly influence market dynamics and investor sentiment. As the global economic landscape continues to evolve, investors will need to remain vigilant and adaptable to changing conditions.
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