1. Weak Q2 Earnings Impact Blue-Chip Stocks
Disappointing Q2 results from key companies dragged down the market. IndusInd Bank plunged 18.5%, contributing 136 points to the Sensex’s loss, while NTPC dropped 3% due to poor earnings performance. Analysts are lowering FY25 earnings forecasts, turning market sentiment bearish.
2. Foreign Institutional Investors Pressure
FIIs have been consistently offloading Indian shares, selling a net Rs 98,085 crore by October 24. Funds are being redirected to China amid Beijing’s stimulus efforts and attractive valuations.
3. Rising Bond Yields and Strong Dollar
Elevated U.S. bond yields, with the 10-year yield above 4%, coupled with a strengthening dollar, are pressuring Indian markets. A strong dollar and higher yields can trigger capital outflows and increase costs for Indian corporations.
4. US Election Uncertainty
The upcoming US election has raised market anxiety. Speculation of a Trump victory, which could bring inflationary tax and tariff policies, is supporting higher U.S. yields and a stronger dollar.
5. Less Hopes for Aggressive Fed Rate Cuts
Markets are pricing in a 95.1% chance of only a 25-basis-point cut by the Fed in November, compared to earlier expectations of more significant cuts. This shift in expectations is affecting market sentiment globally.
