Monday D-street bloodbath: Why Indian bourses are in deep red today?

Market rout continues: The domestic markets have tumbled drastically as the Diwali celebrations come to an end at the start of the new week on Monday. Despite ending on a positive note in the Muhurat Trading session, the BSE’s 30-share Sensitive Index fell as much as 1300 points whereas National Stock Exchange’s Nifty 50 was trading 420 points down. 

As of 12:34 pm, the NSE Nifty 50 was trading 420.09 points or 1.73 per cent down at 23,886.75 while Sensex was down by 1206 or 1.51 per cent at 78,503.02. 

As the market rout continued, all the sectoral indices at the NSE were trading in red with PSU Banks, Nifty Realty, Nifty Metal, and Nifty Auto taking the biggest hit. The Real Estate index was down 2.91 per cent while PSU Banks suffered a 2.18 per cent decline. 

While Tech Mahindra , Mahindra & Mahindra, and HCL Tech traded in the green, the rest of the 27 stocks in BSE Sensex were trading in deep red on Monday. 

The crash, which is not surprising for investors, is being driven by a series of factors contributing to the prevailing negative sentiment. Some of them are as follows: 

China’s attempts to revive its economy

From November 4 to November 8, China’s National People's Congress (NPC) standing committee is set to meet to announce the next set of stimulus measures, aiming to boost the economy of the nation. Measures, which are likely to affect the Chinese market in the short term are being closely watched by the investor worldwide. As China becomes a lucrative short-term bet, Foreign Institutional Investors (FIIs) will move their money towards China, worsening the situation in Indian bourses. 

Federal Reserve’s policy decision

The United States Federal Reserve’s monetary policy committee is set to meet on November 6-7 and investors would be closely watching any indications of changes in interest rates and its potential impact on the mother markets. The cautious approach of investors might be hindering the ‘buying low’ sentiment in the market. 

No clarity on US Presidential Elections

As the biggest economy in the world is undergoing a heated and closely contested presidential run, the lack of clarity on who will be heading the White House for the next four years is creating a sense of ambiguity in the market. As Wall Street is likely to remain volatile until the new President of the United States gets clear, the volatility will continue to transit towards Asian markets, including India. 

Heavyweights down significantly

The market heavyweights including Mukesh Ambani ’s Reliance, Tata Motors , Bajaj Financial Services , ICICI Bank , ITC, State Bank of India, Tata Steel, Bharti Airtel, and others have registered a strong decline on Monday. Reliance, the largest company by market capitalisation in Indian markets, is trading 3.11 per cent down while State Bank of India and ICIC Bank were trading more than 1.5 per cent down, driving the broader market sentiment towards negative.