Mumbai, October 6
After starting the current month on a tragic note, investors in the stock market will be closely monitoring the global geopolitical situations, outcomes of RBI's Monetary Policy Committee (MPC), and second quarter results of the companies, as per the market experts.
The market watchers say that the escalating geopolitical tensions in the Middle East have become a major worry for investors globally.
However, they say that the Indian stock market may rebound because the US markets have shown resilience despite the volatility, adding that MPC's rate cut indication will also lift the market. "Investors will be closely monitoring developments in the geopolitical situation and its impact on crude prices. The trend in foreign flows, along with the positioning of domestic flows, will also be crucial. Notably, the US markets have shown resilience despite rising volatility, which could potentially trigger a rebound in Indian markets as well. Any indication of a future rate cut in the commentary could lift market sentiment amid global volatility," said Ajit Mishra - SVP, Research, Religare Broking Ltd observing the market."Geopolitical tensions in the Middle East have become a major worry for global equity markets. But the markets have, so far, shrugged off these tensions. The mother market US is resilient with 21 per cent returns YTD. Even though crude has risen in recent days, there has been no sharp spike so far. The situation will change if Israel attacks oil installations in Iran," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. The MPC committee, which decides on the policy rates, will announce its decisions on the policy rate on October 9. Furthermore, the earnings season will commence on Monday, with IT giant TCS set to announce its results on October 10, while Index of Industrial Production (IIP) data is due on October 11. By definition, the IIP is an index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.The market sentiment was bearish from the start of October due to the tension in the middle-east which raised crude prices amid fears of supply disruptions. The Indian stock market took a sharp downturn after three consecutive weeks of gains, losing 4.5 per cent, largely due to negative global cues.
Additionally, the stock market saw persistent selling from foreign investors and investors started moving towards the Chinese market in search of better returns.
As a result, the benchmark indices Nifty and Sensex settled around the week's low, closing at 25,014.6 and 81,688.4, respectively on last Friday. In just the first three trading sessions of the month, foerign portfolio investors (FPIs) sold equities worth Rs 27,142 crore, according to data from the National Securities Depository Limited (NSDL).
The decline was broad-based, with all major sectors closing in the red except for metals. Realty, auto, and energy were among the top losers.