Domestic Equity Bourses Face Challenges Amid Global Uncertainty

Despite the optimism sparked by impressive Q2FY24 results, domestic indices witnessed a significant downturn brought on by weak global cues with a heavy sell-off due to a sharp rise in US Treasury yields.

Indian frontline indices faced a substantial decline over the last fortnight, driven by weak global cues, even as investors digested concerns stemming from the Israel-Palestine conflict. Furthermore, the benchmark 10-year US Treasury bond yields climbed above the 5 per cent mark for the first time since 2007, reaching a 16-year high. This surge was a result of the Federal Reserve’s reaffirmation of its aggressive stance and its plan for additional interest rate hikes this year, which triggered significant sell-offs in most global markets. Over the last fortnight, FIIs registered an outflow of Rs15,986.09 crore, while DIIs provided considerable market support with a notable inflow of Rs15,064.31 crore. 

However, the BSE Sensex and Nifty 50 ended the two-week period with losses of 3.77 and 3.56 per cent, respectively. Meanwhile, the broader indices, BSE Midcap and BSE Smallcap index, experienced even more pronounced losses but were able to mitigate some of their declines, ultimately closing 3.69 and 3.40 per cent lower, respectively. The investor pessimism was evident across the sectoral front with all the sectoral indices ending the period in the red territory. The BSE Auto and BSE Fast-moving Consumer Goods sectors were the least affected, showing resilience amidst the market downturn, boosted by heightened optimism driven by the festive season and increased demand. [EasyDNNnews:PaidContentStart]

Banking sector, despite some losses, attracted investors as all the major banks reported an impressive growth in the Q2FY24, promoting asset quality improvements and a decline in nonperforming assets (NPAs), while improved balance sheets and higher demand are driving up bank loan growth. In the financial services sector, Bajaj Finance, a leading player, posted a 24 per cent year-on-year growth in net profit, while Jio Financial Services doubled the net profit compared to the previous quarter. Reliance Industries reported a 27 per cent year-on-year increase in its consolidated net profit, attributed to higher EBITDA and a robust retail business. 

The real estate sector, following a strong rally, is now undergoing the anticipated profit-booking phase due to prevailing weak global sentiments. Consequently, the BSE Realty sector emerged as the hardest hit, experiencing a 5.46 per cent decline over the past two weeks. Analysts continue to have faith in the sector’s resilience, driven by increasing demand and positive quarterly performances by companies. Heavy selling pressure was observed in the oil & gas and metal sectors, driven by concerns about weakening demand, compounded by ongoing global geopolitical tensions. 

In other developments, India’s eight key sectors experienced an 8.1 per cent rise in September, marking the slowest growth in the past four months, as per data unveiled by the Ministry of Commerce and Industry. According to data from the Reserve Bank of India (RBI), India’s foreign exchange reserves decreased by USD 2.36 billion, settling at USD 583.53 billion during the week ending on October 20. 

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