In a turbulent trading session on Tuesday, the Indian stock market experienced sharp fluctuations as the Sensex oscillated between gains and losses. Ultimately, the Sensex closed at 79,476.63 points, rising 694.39 points or 0.88%, while the Nifty finished at 24,213.30 points, up by 217.95 points or 0.91%. Despite these gains, the Sensex remains below its all-time high of 85,978 points. Key sectors that contributed to the rise included Nifty Bank, Financial Services, Metal, PSU Bank, and Private Bank, according to data from the NSE.
During Tuesday’s session, the Sensex saw an intraday drop of nearly 1,500 points before recovering a portion of its losses by the close. This volatility stemmed largely from the ongoing sell-off by foreign portfolio investors (FPIs), who have been offloading significant holdings in the Indian markets. October saw foreign funds exit with net sales totaling ₹94,017 crore, marking their highest-ever monthly outflow, according to National Securities Depository Limited (NSDL) data. This trend reversed the previous four-month streak of net buying by FPIs and has weighed heavily on the Indian stock indices.
Analysts are noting the underperformance of the Indian stock market compared to the US, where the S&P 500 has gained 20.45% year-to-date (YTD), in contrast to the Nifty’s 10.36% YTD rise. Domestic factors are impacting the performance, as two-thirds of Nifty 50 companies reported earnings below expectations in Q2, prompting a downward revision of Nifty 50’s FY25 earnings growth from 15% to under 10%. “Given this earnings downgrade, it will be challenging to sustain the current valuation levels, leading to persistent FII selling,” explained V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Looking forward, both domestic and international investors are closely monitoring the upcoming US presidential election on November 5, where Kamala Harris and Donald Trump are in a closely contested race. Additionally, the Federal Reserve’s monetary policy meeting on Thursday is expected to impact global market sentiment. Indian investors are also keeping an eye on the ongoing earnings season for India Inc., which could further influence market performance.
With both the US elections and Fed policy decisions on the horizon, the market is expected to remain volatile as investors weigh global and domestic factors impacting the Indian economy.
