Explore sectoral performances and the impact of global developments on Sensex and Nifty 50
The Indian stock market opened the week on a positive note, following overnight gains on Wall Street. Both the BSE Sensex and the Nifty 50 moved higher after a rough start on Monday. Positive cues from global indices and robust buying in key sectors contributed to the rally.
Early Trade Gains
At the start of trading, the BSE Sensex stood at 84,429.72, marking an increase of 129.94 points or 0.15%. Meanwhile, the Nifty 50 was up 46.45 points or 0.18% at 25,857.30, reported by Business Standard. The early momentum was largely driven by strong performances in technology and financial stocks.
However, it wasn’t a completely smooth ride for all the constituents of the index. Eight out of the 30 stocks on the BSE Sensex were trading in the red. Losses were led by Asian Paints, which declined 0.99%, followed by JSW Steel, Tata Steel, Titan Company, and Hindustan Unilever.
On the Nifty 50, Tech Mahindra emerged as the top gainer, rising by 2.51%. Mahindra & Mahindra, Larsen & Toubro, Infosys, and Wipro were other notable gainers. In contrast, Asian Paints, JSW Steel, Tata Steel, Hindalco, and Sun Pharma were the laggards, pulling back gains made by the broader market.
Sectoral Performances
Major sectoral indices were also largely in the green. Gains were led by the Nifty IT index, which climbed 0.89%. Financial Services, Auto, Consumer Durables, and Oil & Gas indices also recorded modest gains, reflecting strong buying interest in these segments.
On the flip side, the Metal index slipped by 0.40%. FMCG, Health, and Pharma sectors also saw mild declines, indicating some profit-booking in these traditionally defensive sectors.
The broader markets echoed this positive sentiment, with the BSE SmallCap gaining 0.35% and the BSE MidCap climbing 0.14%.
Recovery After Monday’s Setback
The market’s recovery on Tuesday came after a steep decline on Monday. The BSE Sensex had plunged 1,272.07 points or 1.49% to close at 84,299.78. Similarly, the Nifty 50 ended down 368.10 points or 1.41% at 25,810.85.
The sell-off was driven by massive profit-booking and concerns over potential rate hikes by the US Federal Reserve. Market participants turned cautious amid fears that aggressive monetary policy tightening could slow global growth.
Sector-wise, auto stocks were the worst hit, with the Nifty Auto index dropping 2%. Banking, financial services, and realty indices also faced sharp declines of over 1% each. On the contrary, Media and Metal indices managed to defy the broader market trend, posting gains of 1.33% and 1.12%, respectively.
Global Factors in Play
The Indian market’s direction was also influenced by global developments. In Asia, markets had a mixed session, with several major indices closed due to public holidays. South Korea, Hong Kong, and mainland China markets were shut. China’s markets will remain closed for the rest of the week due to Golden Week celebrations.
Japan’s Nikkei 225 rebounded sharply, gaining 1.73% after a significant 4.8% decline on Monday. The Topix index followed a similar trajectory, rising 1.43%. This bounce was driven by strong economic data from Japan, which showed steady sentiment among large manufacturers and a decline in the unemployment rate.
Meanwhile, in Australia, the S&P/ASX 200 fell 0.47%, pulling back from recent highs. This mixed performance in the Asia-Pacific region underscores the complex interplay of global factors impacting regional markets.
US Market Influence
The rally in Indian indices was also supported by overnight gains on Wall Street. The Dow Jones Industrial Average edged up 0.04% to 42,330.15. The S&P 500 rose 0.42% to 5,762.48, while the Nasdaq Composite gained 0.38% to 18,189.17.
For the month, the S&P 500 recorded a gain of 2.01%, while the quarter saw a rise of 5.53%. This was largely due to a benign reading on US inflation, which raised hopes that the Federal Reserve might slow down the pace of interest rate hikes.
Despite a hawkish stance from Federal Reserve Chair Jerome Powell, who suggested that future rate cuts would be less aggressive, the US market remained buoyant. Investors shrugged off concerns of slower easing, focusing instead on positive economic indicators.
Global Commodities
In the energy markets, oil prices remained volatile. US crude settled down by 1 cent at $68.17 per barrel. Despite the modest daily decline, oil experienced a significant monthly drop of 7%—the largest since October 2023.
Brent crude was similarly weak, ending down 21 cents at $71.77 per barrel. For the quarter, Brent posted a 17% decline, its biggest quarterly loss in a year. The dip was driven by concerns of weakening global demand, overshadowing potential supply disruptions due to conflicts in the Middle East.
Impact of New Transaction Charges
Back home, Indian markets will see the implementation of new transaction charges by the NSE and BSE starting October 1. This move, in line with a Securities and Exchange Board of India (SEBI) directive, aims to eliminate the slab-wise charge structure for market infrastructure institutions (MIIs).
For equity options, the NSE will now charge ₹3,503 per crore of premium value for each side of a transaction. The BSE, on the other hand, has adjusted its charges for Sensex and Bankex options contracts to ₹3,250 per crore of premium turnover.
This change in transaction charges comes alongside an increase in the Securities Transaction Tax (STT) for futures and options trading. The STT for futures trading has risen to 0.02% from 0.0125%, while options trading now carries an STT of 0.1%.
Market Outlook
Looking ahead, the Indian market’s trajectory will be shaped by a combination of global and domestic factors. The focus will remain on economic data from the US, China’s stimulus measures, and domestic corporate earnings.
With several major Asian markets closed, trading volumes in the region are likely to be lower. This could result in increased volatility as traders react to news flows in a thinner market.
Investors will also keep a close watch on commodity prices, particularly oil, which has been a key driver of inflation. Any significant movement in crude prices could influence inflation expectations and, by extension, central bank policy decisions.
Key Takeaways
Indian markets rebounded on Tuesday after a sharp fall on Monday, driven by strong performances in IT and financial stocks.
Global factors, including overnight gains on Wall Street and economic data from Japan, contributed to the positive sentiment.
New transaction charges and increased STT rates took effect in India on October 1, as per SEBI’s directive.
Oil prices remain volatile, with US crude and Brent both recording significant monthly declines.
Investors are focused on global economic cues, particularly US inflation data and China’s stimulus measures.
Final Thoughts
The Indian stock market is navigating a complex environment marked by global economic uncertainties and domestic regulatory changes. While Tuesday’s rally is a positive sign, sustained gains will depend on how these factors evolve in the coming weeks.
For now, it’s crucial for investors to remain vigilant and consider a diversified approach to mitigate risks. The market’s response to regulatory changes and global developments will be key in determining the direction of Indian equities in the near term.
