Sensex, Nifty: 5 reasons why stock market is falling today

Benchmark indices Sensex and Nifty wiped out early gains and took a beating, taking their losing run to the sixth trading session on Monday, as investors fear Rs 27,142 crore FPI outflows in just a few sessions of October could be a harbinger of a bigger selloff ahead , as investors globally chase battered Chinese stocks, giving domestic equities, especially midcap and smallcap shares, a reality check. With the Brent crude oil inching in closer to $80 a barrel mark, the looming Israel retaliation against Iran, has flared up geopolitical tensions. The exit poll results for Haryana and J&K pointed towards losses for the ruling BJP. Add to that is the fact that the India Inc is not projected to report healthy earnings this quarter. These factors are all weighing on the market. The market is ignoring the positive economic data coming from the US for now.

“In a sudden U-turn in FII strategy, FIIs turned massive sellers in the Indian market in October. The selling has been mainly triggered by the outperformance of Chinese stocks. The Hang Seng index shot up by 26 per cent in the last one month and this bullishness is expected to continue since valuations of Chinese stocks are very low and the Chinese economy is expected to do well in response to the monetary and fiscal stimulus being implemented by the Chinese authorities,” said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

State elections, tactical ouflows

The outcomes of the recent state elections in Haryana and Jammu & Kashmir, while not a needle mover, may keep the markets on edge, as exit polls predicted losses for the BJP in both Haryana and Jammu & Kashmir, MOFSL in its latest strategy note said .

MOFSL said that the stock markets appear to be experiencing a genuine tug-of-war between the headwinds and tailwinds. It noted that the monetary stimulus unleashed by China has sparked a wave of tactical FII outflows from India. Corporate earnings, after four consecutive years of healthy double-digit growth, are moderating due to pressures from commodities and fading tailwinds from BFSI asset quality improvements, it said.

Q2 results

September quarter results will start pouring in this week. Kotak Institutional Equities expects Q2FY25 net profits for the BSE-30 index constituents to increase 5.3 per cent YoY and 2.7 per cent QoQ, and of the Nifty index to grow 3.7 per cent YoY and 2.5 per cent QoQ.

“We estimate ‘EPS’ of the BSE-30 Index at Rs3,448 for FY2025 and Rs4,039 for FY2026 and of the Nifty-50 index at Rs1,063 for FY2025 and Rs1,234 for FY2026,” it said.

(more to come)