Indian equity benchmarks ended the week on a firm note, even as a sharp sell-off in the broader market and a jump in crude oil prices kept investors cautious. Dalal Street now heads into Monday, 2 November, with four things on its watchlist.
The Sensex gained 308 points on Friday to close near 74,460. The Nifty 50 rose 116 points to settle at 23,053. Midcap and smallcap stocks moved the other way. The Nifty Midcap 100 and Nifty Smallcap 250 both fell by as much as 2%.
Oil prices
Crude is the biggest external worry. Oil rose 14% in October and settled at its highest level in six months, with traders anxious that the Iran war could escalate after the US midterm elections. Crude has moved above $117 a barrel.
A Saxo Bank briefing on Thursday, cited by Reuters, said oil could stay volatile for the next couple of weeks because of Israel’s recent elections and the US midterms on 3 November. The Danish bank expects crude to hold in a $70 to $90 range even after the conflict ends. Before the war, the range was $60 to $70.
Goldman Sachs’ Daan Struyven, co-head of global commodities research, said recent attacks showed how shipping disruptions could spread and worsen. The bank estimates oil could reach $120 a barrel if attacks on vessels in the Middle East intensify. It could ease towards $80 if exports return to normal.
Foreign investor flows
Foreign institutional investors turned net buyers of Rs 6,305 crore in the cash market, ending a 10-week selling streak. They were buyers in three of the sessions, and that helped drive a strong market recovery.
VK Vijayakumar, chief investment strategist at Geojit Investments, said several factors support Indian equities. The US Federal Reserve’s decision to hold rates is good for global equities, and largecap valuations have become attractive. India’s growth momentum also looks sustained.
Credit growth rose 19.1% year-on-year in September. Lending to industry grew 19.5% and credit to the services sector rose 28.3%. Vijayakumar also pointed to signs of a pickup in industrial capital expenditure, and said the weakening global AI trade is influencing market dynamics.
He said the change in FPI sentiment helped the Nifty reclaim the 23,000 mark. Even as they sold largecap financials, foreign investors have steadily accumulated pharmaceutical and healthcare stocks, along with select digital platform companies.
Rupee’s best month in eight months
The rupee closed at 94.95 against the US dollar on Friday, stronger than 95.26 in the previous session. It gained around 1% in October, its best monthly showing since February. Measures by the Reserve Bank of India to curb dollar demand helped.
February’s rally came on progress in US-India trade talks, before renewed Middle East tensions reversed it. High crude prices and continued foreign portfolio outflows still weigh on the currency.
Weakness in the broader market
Sudeep Shah of SBI Securities noted that the Nifty Midcap 100 and Nifty Smallcap 100 ended in negative territory for a second straight month. Both did stage a meaningful pullback from lower levels last week. They formed bearish candles with long lower shadows, which suggests buyers are emerging at lower levels despite the weak trend.
Both indices still trade below key short-term and long-term moving averages, which continue to slope downward. Shah said this means the broader trend remains corrective.
Technical view on the Nifty
Shah said selling pressure on the Nifty has eased considerably and the index appears to be building a base near an important support zone. It has reclaimed its 20-day exponential moving average, which has started to edge higher. The downward slopes of the 50-day and 100-day averages have flattened considerably. The daily RSI has moved above 50 and is still rising.
“The improving technical setup strengthens our conviction that the benchmark index could extend its ongoing pullback rally over the next couple of trading sessions,” Shah said. He added that a decisive move past the 50-day average could change the near-term technical picture and open the way for the next leg of recovery.
Leave a Reply