FRONTLINE INDICES FALL AS SMALLER INDICES TUMBLE
The wee was marked by all the key sectors showing negative returns for the week. In fact, if the Nifty and Sensex were down, the cuts were much sharper in the mid-cap and small cap indices. With the rising domestic and global uncertainty, alpha hunting was the last item on the agenda of traders and investors. At a macro level, the week saw the geopolitical risks deteriorating as Israel launched fresh strikes on Iran. Markets are worried that amidst the aggression shown by Israel, GCC may not be able to remain neutral for too long.
Also, there are concerns that the situation could aggravate, should the US start to play a more active role in West Asia post the presidential elections. To add fuel to the negative sentiments, India is facing a spike in inflation, while Indian companies are seeing pressure on operating margins. Here are key trends we noted in the week ending October 25, 2024.
Overall, it looked like the markets were hinting at a more systemic demand problem in the Indian economy.
BSE SENSEX 30 INDEX – DEEP CUTS IN OIL AND AUTOS
The table captures the movement of the BSE SENSEX 30 for the week to October 25, 2024.
Date | Open | High | Low | Close |
25-Oct-24 | 80,187.34 | 80,253.19 | 79,137.98 | 79,402.29 |
24-Oct-24 | 80,098.30 | 80,259.82 | 79,813.02 | 80,065.16 |
23-Oct-24 | 79,921.13 | 80,646.31 | 79,891.68 | 80,081.98 |
22-Oct-24 | 81,155.08 | 81,504.24 | 80,149.53 | 80,220.72 |
21-Oct-24 | 81,770.02 | 81,770.02 | 80,811.23 | 81,151.27 |
18-Oct-24 | 80,749.26 | 81,391.15 | 80,409.25 | 81,224.75 |
Weekly Returns | -2.24% |
Data Source: BSE
It was another week of the Sensex falling sharply. In the two previous weeks, the Sensex was down just -0.38% and -0.19% respectively. This week, the Sensex fell by a full 1,823 points or -2.24%. While FPIs were net sellers to the tune of $10.22 Billion in October 2024 till date; IT was the only sector that prevented the Sensex from seeing a much sharper fall in the week. Once again, the big hit came from consumption stories like autos and FMCG. During the week, the Sensex touched a high of 81,770 and a low of 79,138; breaching below the psychological 80,000 levels for the week. That now becomes the resistance.
NIFTY 50 INDEX – HEAVYWEIGHTS PULL DOWN THE NIFTY
The table captures the movement of Nifty 50 index in the week to October 25, 2024.
Date | Open | High | Low | Close |
25-Oct-24 | 24,418.05 | 24,440.25 | 24,073.90 | 24,180.80 |
24-Oct-24 | 24,412.70 | 24,480.65 | 24,341.20 | 24,399.40 |
23-Oct-24 | 24,378.15 | 24,604.25 | 24,378.10 | 24,435.50 |
22-Oct-24 | 24,798.65 | 24,882.00 | 24,445.80 | 24,472.10 |
21-Oct-24 | 24,956.15 | 24,978.30 | 24,679.60 | 24,781.10 |
18-Oct-24 | 24,664.95 | 24,886.20 | 24,567.65 | 24,854.05 |
Weekly Returns | -2.71% |
Data Source: NSE
The Nifty closed the week just around 24,181, after almost testing the 24,000 mark during the week. The Nifty breached several supports in the week like 24,800 and 24,500; with 24,000 being the next key support for the index. The volatility index (VIX) spiked to above the 14.3 levels during the week; still much higher than being classified as a buy-on-dips market. For the Nifty, it was not just the FPI selling, but the loss of confidence in the consumption story that took the markets lower. For the week, Nifty closed -2.71% or 673 points lower, making lower tops and bottoms. During the week, the Nifty touched a high of 24,978 and a low of 24,074, with lows being back-ended.
NIFTY NEXT 50 INDEX – FALLS VERTICALLY DURING THE WEEK
The table captures the movement of Nifty Next 50 for the week to October 25, 2024.
Date | Open | High | Low | Close |
25-Oct-24 | 71,049.55 | 71,244.80 | 68,826.55 | 69,716.50 |
24-Oct-24 | 71,112.95 | 71,360.80 | 70,587.40 | 70,826.25 |
23-Oct-24 | 71,087.20 | 71,706.55 | 70,262.10 | 70,884.70 |
22-Oct-24 | 73,296.50 | 73,351.90 | 71,049.85 | 71,158.65 |
21-Oct-24 | 74,495.20 | 74,782.35 | 73,153.15 | 73,285.35 |
18-Oct-24 | 73,813.60 | 74,415.90 | 73,085.00 | 74,288.10 |
Weekly Returns | -6.15% |
Data Source: NSE
This week; it was almost carnage in the Nifty Next 50 index, which fell a full 4,572 points or -6.15% during the week. Some of the typical sectors in the index like healthcare, defence, and PSUs came under pressure this week. Even metal stocks took a sharp hit after the China stimulus continued to be elusive. The index made its lowest point on Friday and closed with lower highs and lower lows for the week. The sentiments for alpha hunting have soured considerably in recent weeks. This week, the Nifty Next 50 touched a high of 74,782 level and a low of 68,827. The sharply lower lows and lower highs are a bearish signal.
NIFTY MID-CAP 100 INDEX – ALPHA HUNTING NOT FOR NOW
The table captures the movement of Nifty Mid-Cap 100 in the week to October 25, 2024.
Date | Open | High | Low | Close |
25-Oct-24 | 56,482.90 | 56,506.35 | 54,740.95 | 55,277.95 |
24-Oct-24 | 56,533.20 | 56,796.15 | 56,232.15 | 56,349.75 |
23-Oct-24 | 56,100.60 | 57,033.90 | 55,644.25 | 56,533.55 |
22-Oct-24 | 57,722.65 | 57,804.90 | 56,086.75 | 56,174.05 |
21-Oct-24 | 58,807.60 | 58,970.35 | 57,614.20 | 57,677.70 |
18-Oct-24 | 58,222.65 | 58,752.70 | 57,575.30 | 58,649.15 |
Weekly Returns | -5.75% |
Data Source: NSE
The message of “no alpha hunting” was reiterated by the mid-cap index also; as the uncertainty on the oil and currency front is taking its toll on the smaller stocks. However, the good news was in the mutual fund buying report, which saw a lot of mid-caps seeing massive outlays by mutual funds in September 2024. Sectors like mid-cap healthcare, mid-cap PSUs and defence stocks were under pressure during the week. In the week to October 25, 2024, the mid-cap index fell -3,371 points. For the week, the Mid-Cap 100 index touched a high of 58,970 and a low of 54,741; making lower highs and lower lows.
NIFTY SMALL-CAP 100 INDEX – NO SMALL CAPS IN UNCERTAIN TIMES
The table captures movement of Nifty Small Cap 100 in the week to October 25, 2024.
Date | Open | High | Low | Close |
25-Oct-24 | 18,292.35 | 18,352.85 | 17,670.90 | 17,847.90 |
24-Oct-24 | 18,332.25 | 18,426.10 | 18,210.85 | 18,249.15 |
23-Oct-24 | 18,034.95 | 18,459.20 | 17,816.65 | 18,286.20 |
22-Oct-24 | 18,777.60 | 18,782.40 | 18,025.45 | 18,061.00 |
21-Oct-24 | 19,166.90 | 19,181.50 | 18,765.80 | 18,797.40 |
18-Oct-24 | 18,957.75 | 19,102.65 | 18,645.40 | 19,077.80 |
Weekly Returns | -6.45% |
Data Source: NSE
After 2 weeks of positive close, the small cap index could not resist the sell-off any longer. The index fell -1,230 points or -6.45% for the week. The mutual fund action in September did show active buying in small cap stocks. This week, the Nifty Small Cap index touched a high of 19,182 levels and a low of 17,671. Currently, broader concerns in the markets are around geopolitical risk and market allocation internals. However, small stocks are seeing risk-off selling in uncertain times amidst volatility in oil and currency markets.
BANK NIFTY INDEX – RATE CUT BETS OFF FOR NOW
The table below captures the movement of BANKNIFTY in the week to October 25, 2024.
Date | Open | High | Low | Close |
25-Oct-24 | 51,369.75 | 51,501.05 | 50,382.10 | 50,787.45 |
24-Oct-24 | 51,272.30 | 51,781.55 | 51,201.85 | 51,531.15 |
23-Oct-24 | 51,117.80 | 51,551.55 | 51,107.90 | 51,239.00 |
22-Oct-24 | 52,071.35 | 52,257.30 | 51,179.60 | 51,257.15 |
21-Oct-24 | 52,361.10 | 52,577.50 | 51,855.15 | 51,962.70 |
18-Oct-24 | 51,261.00 | 52,199.45 | 51,000.90 | 52,094.20 |
Weekly Returns | -2.51% |
Data Source: NSE
Overall, it was a tepid week for the banks; falling at par with the frontline indices. On the downside, the geopolitical risk is still there. Private sector banking results have shown some pressure, but it remains a beacon of hope and margins in a tough quarter. For now, the rate cuts hopes have been put off from December 2024 to February 2025. A lot will depend on the core sector and fiscal deficit numbers. If core sector again contracts and fiscal situation is comfortable, pressure may come back on the RBI to ease rates. During the week, the Bank Nifty touched a high of 52,578 and a low of 50,382; losing 1,307 points in the week.
NIFTY IT INDEX – DOLLAR STRENGTH SAVES THE BLUSHES, AGAIN
The table captures the movement of Nifty IT index in the week to October 25, 2024.
Date | Open | High | Low | Close |
25-Oct-24 | 42,235.30 | 42,366.15 | 41,874.55 | 42,038.85 |
24-Oct-24 | 41,929.25 | 42,379.60 | 41,926.85 | 42,139.85 |
23-Oct-24 | 41,168.40 | 42,530.95 | 41,151.35 | 42,222.10 |
22-Oct-24 | 41,556.35 | 41,850.60 | 41,155.85 | 41,238.80 |
21-Oct-24 | 42,426.45 | 42,609.05 | 41,481.55 | 41,562.70 |
18-Oct-24 | 42,216.90 | 42,579.75 | 41,838.00 | 42,106.50 |
Weekly Returns | -0.16% |
Data Source: NSE
The IT sector has shown some intrinsic strength, falling a marginal -0.16% amidst the carnage on the street. That is largely thanks to the dollar defensive nature of the sector and the sustained strength in the dollar index in recent weeks. IT was the one index that saved the Nifty and Sensex from a sharp crash. In the previous 3 weeks, IT sector had stayed buoyant even amidst the overall market sell-off. The dollar is likely to remain strong as a safe haven in tumultuous times; and that should help the IT sector hold up markets. For the week, the IT index fell by just -78 points. The Nifty IT index touched a high of 42,851 and a low of 41,151 during the week.
NIFTY OIL & GAS INDEX – CRUDE VOLATILITY AND WEAK GRM HITS OIL
The table captures the Nifty Oil & Gas index for the week to October 25, 2024.
Date | Open | High | Low | Close |
25-Oct-24 | 11,670.80 | 11,683.00 | 11,306.70 | 11,352.20 |
24-Oct-24 | 11,638.10 | 11,693.30 | 11,579.65 | 11,648.60 |
23-Oct-24 | 11,632.75 | 11,757.75 | 11,503.15 | 11,640.10 |
22-Oct-24 | 11,952.20 | 11,987.20 | 11,646.40 | 11,672.05 |
21-Oct-24 | 12,119.80 | 12,160.35 | 11,935.35 | 11,953.65 |
18-Oct-24 | 12,076.50 | 12,135.55 | 11,920.75 | 12,104.25 |
Weekly Returns | -6.21% |
Data Source: NSE
Oil index fell a whopping -6.21% or 752 points after the O2C (oil to chemicals) business of Reliance Industries disappointed in Q2FY25. There has been stress on the gross refining margins (GRMs) in line with the fall in the benchmark Singapore GRM. In the last 4 weeks of FPI selling, the oil & gas index has fallen over 16%, taking the brunt of the market hit. Global Brent crude prices bounced to $76/bbl, but it is the geopolitical risk in West Asia that is actually spooking the index. For the week to October 25, 2024, the Oil & Gas index touched a high of 12,160 and a low of 11,307; making lower highs and lower lows for the week.
NIFTY AUTO INDEX – VALUATION AND CONSUMPTION CONCERNS
The table captures the movement of Nifty Auto index in the week to October 25, 2024.
Date | Open | High | Low | Close |
25-Oct-24 | 24,360.95 | 24,378.15 | 23,519.80 | 23,799.30 |
24-Oct-24 | 24,432.90 | 24,555.45 | 24,257.45 | 24,324.85 |
23-Oct-24 | 24,593.50 | 24,873.80 | 24,388.00 | 24,451.30 |
22-Oct-24 | 25,297.45 | 25,316.45 | 24,583.95 | 24,627.25 |
21-Oct-24 | 25,161.55 | 25,359.55 | 24,777.60 | 25,251.85 |
18-Oct-24 | 24,907.95 | 25,247.80 | 24,699.35 | 25,146.90 |
Weekly Returns | -5.36% |
Data Source: NSE
In the last 4 weeks, the auto index has also lost over 15% and is almost synonymous with FPI selling. The problems for auto sector began last week with Bajaj Auto reporting 31% fall in profits. The Bajaj Auto management guided festival sales growth of just 3-5% this year, compared to 8% last year. Urban consumption continues to be the weak link for autos. For the week, the auto index closed -1,348 points, or -5.36% lower. Auto Index made a weekly high of 25,360 and a low of 23,520; again, a case of lower highs and lower lows!
NIFTY FMCG INDEX – URBAN DEMAND REMAINS THE PRESSURE POINT
The table captures the movement of Nifty FMCG index in the week to October 25, 2024.
Date | Open | High | Low | Close |
25-Oct-24 | 58,724.90 | 59,465.55 | 58,681.20 | 58,908.50 |
24-Oct-24 | 60,171.80 | 60,186.40 | 58,253.20 | 58,396.90 |
23-Oct-24 | 59,712.20 | 60,352.15 | 59,712.20 | 60,097.65 |
22-Oct-24 | 60,293.25 | 60,562.65 | 59,892.85 | 60,000.95 |
21-Oct-24 | 60,929.00 | 60,990.50 | 59,908.20 | 60,280.25 |
18-Oct-24 | 61,372.50 | 61,409.40 | 60,453.20 | 61,042.10 |
Weekly Returns | -3.50% |
Data Source: NSE
After gaining more than 22% in 10 weeks, the FMCG index has lost -11.5% in the last 4 weeks; wiping out nearly half of it recent gains. FMCG stocks bore the brunt of FPI selling in last 3 weeks; as higher inflation, household budget pressures, tepid festival demand and a slow urban demand recovery spooked the FMCG sector. For the week, the FMCG index fell by -2,134 points or -3.50%. During the week, FMCG index touched a high of 60,991 and a low of 58,681. The consumption worries have not only hit FMCG stocks; but also, other consumption related sectors like consumer durables, autos, and PSU banks.
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