Indian equity markets remained under pressure on October 1, with the Sensex and Nifty extending their recent declines as investors continued to assess a combination of domestic and global factors.
Persistent foreign investor selling remained one of the major concerns for the market. Provisional exchange data showed that foreign investors sold Indian equities worth more than Rs 10,000 crore on September 30. Reuters reported that foreign investors had sold about 1.06 billion dollars of Indian shares on Wednesday alone, while their selling over the previous five sessions had reached around 3.6 billion dollars.
The sustained foreign outflows have added pressure to Indian equities at a time when global borrowing costs remain elevated. The benchmark 10 year US Treasury yield has moved to multi year highs, increasing the focus on global interest rate expectations and the relative attractiveness of emerging market assets.
The Indian rupee has also remained under pressure. Reuters reported that the rupee fell to a two month low on October 1, while the US 10 year Treasury yield reached 5.34 percent. Higher global yields and elevated oil prices were among the factors weighing on the currency and financial markets.
Crude oil prices have also remained an important factor for Indian investors. India is a major importer of crude oil, making movements in international energy prices relevant to inflation expectations, corporate costs and the country's external balances. Brent crude had recently moved close to the 100 dollar per barrel level, although prices showed some easing at points during Thursday trading.
At the start of Thursday's session, the BSE Sensex opened at 72,192.89, down 287.40 points, while the NSE Nifty opened at 22,543.70, lower by 76.75 points. Later in the morning, the Sensex was trading around 72,304, while the Nifty was around 22,536.
The weakness came after Indian benchmark indices had already recorded losses in the previous sessions. The Sensex had closed Wednesday at 72,480.29, while the Nifty 50 settled at 22,620.45. Both indices had been under pressure despite periods of intraday recovery.
The market was also moving towards an eighth consecutive weekly decline. Reports from Reuters and other financial publications said this would represent the longest weekly losing streak for the Indian benchmark indices in about 25 years, with the previous comparable streak dating back to 2001.
Foreign portfolio outflows have been a significant factor behind the recent weakness. According to Reuters, cumulative foreign selling during the year had reached a record level of around 27.8 billion dollars by the end of September. Such sustained selling can affect market liquidity and put additional pressure on benchmark indices, particularly when global yields and energy prices are also elevated.
Sectoral movements have also reflected the cautious market environment. Reuters reported that 11 of 16 major sectors were trading lower during Thursday morning's session. The Nifty Auto index was among the weaker sectors, while the IT index gained after US inflation data indicated a slower than expected increase in August.
Individual stocks also influenced the broader indices. Bajaj Auto and Mahindra and Mahindra were among the auto stocks under pressure following their domestic sales figures. Meanwhile, Kotak Mahindra Bank gained after the appointment of Anup Kumar Saha as its new chief executive officer.
Global market conditions remain an important consideration for Indian investors. Higher US Treasury yields can influence capital flows towards US assets, while movements in crude oil can affect inflation expectations and corporate costs. Investors are also monitoring the outlook for US monetary policy and upcoming economic data.
Developments in the Middle East have added another layer of uncertainty because changes in regional oil supply can quickly affect international crude prices. At the same time, developments involving US and Iran discussions have contributed to fluctuations in oil prices during the week.
The market's immediate direction will therefore depend on several factors, including foreign fund flows, movements in the rupee, crude oil prices, global bond yields and international market sentiment. Investors are also expected to track economic data from the United States for clues about the Federal Reserve's future interest rate decisions.
For Indian equities, the combination of foreign selling, higher global borrowing costs and elevated energy prices has created a challenging trading environment. However, individual sectors and stocks have continued to show different trends, highlighting the uneven nature of the market decline.
With Indian markets scheduled to remain closed on Friday for a local holiday, Thursday's trading session was also being watched in the context of the extended market break. Reuters reported that trading activity was relatively subdued in the morning as investors adjusted positions ahead of the holiday.
The Sensex and Nifty therefore remained the key indicators of investor sentiment as the market entered the final trading session before the holiday. The continuation of foreign outflows and movements in global yields and crude prices are likely to remain important factors for market participants as they assess the direction of Indian equities.
