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Indian Markets Slip Amid Visa Fears, Sectoral Weakness

By Mandar in Indian Market Insights —

Indian Equity Market Overview - September 24

Indian equity markets experienced a downturn on September 24, marking the fourth consecutive session of losses. The decline was primarily fueled by a confluence of global and domestic factors, leading to sell-offs across multiple sectors.

  • The Sensex dropped by 386 points (0.47%), closing at 65,631.
  • The Nifty 50 fell by 113 points (0.45%), settling at 19,507.

Key Drivers of the Downturn

Several factors contributed to the market's negative performance:

  • Weak Global Cues: Remarks from US Federal Reserve Chair Jerome Powell raised concerns about elevated equity valuations due to inflation and employment risks.
  • US Policy Concerns: The proposed US policies, like the $100,000 fee on H-1B visa applications, negatively impacted investor sentiment.
  • Sector-Specific Impact: The IT sector faced significant losses, anticipating margin pressures for outsourcing firms.

Sectoral Performance

Most sectors experienced declines, reflecting broad-based cautiousness. However, one sector showed resilience.

  • Declining Sectors: IT, auto, media, metal, oil & gas, realty, pharma, and infrastructure saw losses, primarily ranging from 0.2% to 2.4%. The realty sector experienced the most significant drop at 2.42%.
  • FMCG Resilience: The FMCG sector was the only one to finish in positive territory, with companies like Hindustan Unilever and Nestle showing gains.

Market Indices Performance

  • Midcap and Smallcap Indices: These indices retreated, shedding approximately 0.9% and 0.5%, respectively.

Investor Behavior

  • Foreign Investors: Foreign investors intensified selling activity, contributing to market pressure.
  • Domestic Institutional Investors: Domestic institutional investors provided some support to the market through net buying.
  • Foreign Outflows: ?2,425.7 crore
  • Domestic Institutional Investment: ?1,211.7 crore

Market Analysis and Outlook

Market experts cited several reasons for the downturn and highlighted factors that could influence future market movements.

  • Valuation Concerns: Strong prior gains and recent GST rate changes have pushed valuations to a level generally considered full, leading to profit-taking.
  • Policy Uncertainty: Uncertainty surrounding policy outcomes and the US-India trade relationship added to market volatility.
  • Future Influences: Upcoming earnings releases and potential rate cuts could significantly impact market direction in the coming months.

Summary

In conclusion, a combination of global inflation concerns, shifts in US visa policies, and subdued investor sentiment contributed to the pressure on Indian markets. The IT and realty sectors were particularly affected, while the FMCG sector demonstrated resilience.