Indian Stock Market Extends Losses: Weak Earnings and Geopolitical Risks in Focus

The Indian stock market extended its losing streak in early Friday trading, with key indices opening lower once again. The Nifty 50 index began with a significant gap, opening at 24,664 and quickly dropping to an intraday low of 24,567. This marked a drop of around 560 points over the last four consecutive sessions.

Similarly, the BSE Sensex opened lower at 80,749 and dipped to an intraday low of 80,409, losing about 1,564 points over four days. The Nifty Bank index also started lower at 51,261, reaching a low of 51,000 before banking stocks saw a recovery due to buying interest at lower levels.

Reasons Behind the Fall

Experts attribute the market downturn to a combination of global and domestic uncertainties. The approaching US Presidential Elections and rising geopolitical tensions in the Middle East have left international investors wary. On the domestic front, DIIs (Domestic Institutional Investors) are awaiting the outcome of the Maharashtra State Assembly Elections, which is a key political event following the Haryana Assembly results.

US Presidential Elections Impact

According to Mahesh M Ojha, AVP of Research at Hensex Securities, the market is witnessing significant selling by FIIs (Foreign Institutional Investors). This is due to concerns about a closely contested US Presidential Election, which is making investors nervous. With DIIs not making substantial purchases, the market is struggling to find support at lower levels.

Geopolitical Tensions

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, highlighted that the geopolitical instability in the Middle East is another factor contributing to the uncertainty in the stock market. This has led to sharp selling as investors remain cautious about the upcoming trading sessions.

Disappointing Q2 Results

Another reason for the market's downturn is the underwhelming Q2 results for 2024. Siddhartha Khemka, Head of Research at Motilal Oswal, noted that earnings from major companies have not met market expectations, adding to the selling pressure.

Domestic Political Uncertainty

Mahesh M Ojha also pointed out that DIIs are holding back their investments due to the upcoming Maharashtra State Assembly Elections. The outcome of this election is crucial as it may reflect the strength of the central government in India's financial capital, Mumbai.

Weakness in the Indian Rupee

The weakening Indian Rupee is further weighing on the market. Ojha mentioned that the currency’s decline has sparked concerns about its potential impact on India’s fiscal deficit, adding another layer of pressure on Dalal Street.

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Key Levels to Watch

For the Nifty 50 index, Anshul Jain emphasized that it has breached the crucial support level of 24,700. Immediate support is now expected at 24,500, with further critical levels at 24,350 and 24,300. These levels will be important to watch in the coming sessions as investors remain cautious amidst the ongoing uncertainties.