Stock market today: Domestic equity benchmarks Sensex and Nifty 50 staged a spirited recovery on value buying from their early losses in the previous session amid firm trends in global equities ahead of the tightly fought US presidential elections 2024. Late buying in banking, metal, steel, and oil and gas shares helped the frontline indices reverse course in the final two hours aiding a broad market recovery after falling 0.6 per cent each earlier during the session.
Notably, the Indian stock market recorded its worst intraday performance in a month on November 5, 2024. Trading in a range with a negative bias in the first half of the session, investors turned cautious due to the high-stakes US election results. Democratic candidate Kamala Harris and Republican Donald Trump remain virtually tied in opinion polls, leading to a deadlocked situation.
Slowing corporate earnings and record monthly foreign outflows have weighed on domestic equities over the last five weeks, with the Nifty 50 dropping about eight per cent from record highs hit on September 27. On Tuesday, financials rose about two per cent, with top private lender HDFC Bank, the heaviest stock in the Nifty and Sensex benchmarks, advancing 2.6 per cent.
Bouncing back from Monday's sharp fall, the 30-share BSE Sensex jumped 694.39 points or 0.88 per cent to settle at 79,476.63. During the day, it soared 740.89 points or 0.94 per cent to 79,523.13. The NSE Nifty rose 217.95 points or 0.91 per cent to settle at 24,213.30 as 39 of its constituents advanced and 11 declined.
Sensex hit a low of 78,296.70 while Nifty touched 23,842.75. The robust rally in the banking and metal sectors propelled the Nifty 50 to close the trading session by 0.91 per cent at 24,213. After hitting an intraday low of 23,842, the index rebounded by 372 points, reflecting a recovery of 1.55 per cent.
In terms of individual stocks, 39 constituents of the Nifty 50 closed the session in positive territory. JSW Steel topped the list with a gain of 4.7 per cent, followed by Bajaj Auto, which rose by 3.7 per cent. Other notable performers included Tata Steel, Hindalco Industries, Axis Bank rose over two per cent.
The metals index rose 2.8 per cent, leading sectoral gains, aided by a subdued US dollar and on expectations of demand recovery in top consumer China. Improving Chinese demand is a positive for metal prices and, in turn, for global metal firms.
The broader, more domestically focused mid- and small-cap stocks also closed higher but lagged behind the benchmark indices. The Nifty Midcap 100 index recorded a gain of 0.59 per cent, finishing at 56,115, while the Nifty Smallcap 100 index ended the session at 18,503, reflecting an increase of 0.43 per cent.
Analysts say a Trump win could lead to lower corporate tax rates in the US, which is expected to boost spending and, in turn, benefit several equity sectors in India, according to analysts. A Harris victory, meanwhile, is seen as a sign of policy continuity, a neutral-to-mildly-positive outcome for Indian stocks.
“The domestic market experienced a sharp recovery, reclaiming most of the previous day’s losses amid uncertainty surrounding the likely downgrade in Q2 GDP forecast and closely contested US presidential election. However, the recent rebound in domestic manufacturing activity data and the expected revival of consumption in H2 are likely to support market sentiment,” said Vinod Nair, Head of Research at Geojit Financial Services.
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Wall Street's main indexes rose in a broad rally. However, investors still braced for volatile trading over the next few sessions as voting began in the United States to elect the 47th President. The final outcome could take days as opinion polls in the campaign's final days showed the contest between Trump and Harris was too close to call.
On voting day, volatility was more noticeable in bonds and currency markets. Equity markets were largely calm, supported by an optimistic long-term outlook based on corporate earnings and economic data. The VIX, an index of Wall Street volatility, eased to 20.24, well below levels seen during the 2020 election and the two-month high it hit last week.
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The S&P 500 last rose more than one per cent, with Palantir Technologies' upbeat earnings fueling a 24 per cent jump in its shares. The tech-heavy Nasdaq 100 was buoyed by Nvidia and Tesla. The Dow Jones Industrial Average last rose 326.12 points, or 0.78 per cent, to 42,120.72. US 10-year yields rose five basis points to 4.34 per cent. The US dollar weakened in afternoon trading in New York.
The US Federal Reserve's November policy meeting will start on Wednesday. While markets are betting on a 25-basis point cut to interest rate, the outlook for future easing has grown uncertain as data points to a strong economy.
D-Street experts believe that optimism across Asian and European indices ahead of the US election outcome boosted local traders' confidence. However, the medium-term outlook still looks hazy due to scepticism over further US Fed rate cuts and subdued corporate earnings.
"Technically, the markets bounced back up after reaching a critical support level of 23,800, a key point for either holding or dropping further. This upward movement was mainly driven by news that Iran and Israel may be open to ceasefire talks, which, if confirmed, would be a huge positive for the market," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
"Additionally, there is speculation that Trump might win the upcoming US election, and the US Federal Reserve could cut interest rates by 0.25 per cent for a second time. However, a true sign of strength would be seen if the market closes above the 24,380-24,400 range," added Tapse.
According to Ajit Mishra – SVP, Research, Religare Broking Ltd, the bulls are working to defend the 24,000 level in the Nifty amid ongoing choppiness, and a strong rally in banking majors has raised hopes for further recovery.
“However, upside potential appears limited, with a significant resistance zone around 24,400-24,500. With all eyes on the US presidential election, much will depend on global cues. Traders are advised to maintain a hedged approach and keep position sizes in check until we see some stability,” said Mishra.
Overall, experts believe that nervousness around the US presidential election outcome continues as it can result in major global policy shifts. Siddhartha Khemka, Head—Research, Wealth Management, Motilal Oswal Financial Services Ltd, expects markets to remain volatile due to global factors and stock-specific action as index heavyweights announce quarterly results during the next few days.
The trends likely emerging in the early morning of November 6 will indicate a tough fight between the two candidates, leading to high volatility in the equity markets during the trading session. “Investors should remain cautious while investing in the Indian market today, focusing on fundamentally strong businesses with proven track records. It’s essential to be prepared for volatility before making investment decisions,” said Yashovardhan Khemka - Senior Manager — Research at Abans Holdings.
Technical View: For the second consecutive day, Nifty has found support around a historical swing low. On the technical front, a piercing line candlestick pattern appears on the daily chart, suggesting a potential bullish reversal. A positive divergence on the daily RSI further strengthens the case for an upward move.
“A buy-on-dips strategy could benefit traders as long as Nifty stays above 24,000. On the higher side, Nifty may advance toward the 24,750-24,800 range. However, the buy-on-dips strategy must be reviewed once Nifty falls below 24,000,” said Rupak De, Senior Technical Analyst at LKP Securities.
Bank Nifty formed a bullish, engulfing candlestick pattern on the daily chart, indicating strength. “As per this pattern, the relief rally will continue as long as the index holds 50,865. On the upside, a recent swing high is placed near 52,580, which will act as resistance for Bank Nifty. Overall, it is consolidating in a narrow range in the near team,” said Hrishikesh Yedve, AVP of Technical and Derivatives Research at Asit C. Mehta Investment Intermediates Ltd.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
