Investors profit by 20.8 lakh rupees in five days due to stock market growth

The Indian stock market demonstrated impressive growth on Thursday, driven by the US Federal Reserve's decision to keep interest rates unchanged. The shift in market sentiment led to a significant recovery.

After the close of trading, the Sensex index reached 74,151.04, showing a rise of 1.24% (905.01 points), while the Nifty climbed by 238 points or 1.05%, reaching 22,936.75. Out of the top 30 BSE stocks, only four declined, whereas 26 stocks showed growth.

Adani Port shares recorded the largest increase, rising by 5%. Additionally, Kotak Mahindra Bank shares increased by approximately 4%. Power Grid, Bajaj Finance, and Eternal shares also posted gains of over 3%. Over 2% growth was also registered in SBI, Hindustan Unilever, Titan, and NTPC shares.

Thanks to this growth, investors realized good profits. The market capitalization of BSE increased from 472 billion rupees to 477 billion rupees, representing an increase in investor invested value of 500 million rupees for the day.

The Fed's decision was a key factor: the Federal Reserve did not change interest rates on Wednesday and decided to postpone any changes in borrowing costs until the US elections next week, awaiting further inflation data, which it stated remains high.

Foreign investors also contributed. Interim data indicates that FPIs purchased Indian stocks worth 872 million rupees ($91.58 million USD) in the second consecutive session on Wednesday. Meanwhile, they sold stocks worth $3.74 billion in October. Domestic Institutional Investors (DIIs) also became net buyers, investing 643 million rupees during the session.

Tensions in West Asia are having a serious negative impact on the Indian stock market. Amid rising crude oil prices and inflation concerns, selling pressure is observed. On Friday, the Sensex index closed down for the fourth consecutive working day. Over the last four trading sessions, the total market capitalization of companies listed on the Bombay Stock Exchange (BSE) has decreased by approximately ₹20.79 trillion.

The Sensex on the BSE fell by 125.56 points, or 0.17%, on Friday, closing at 73,123.83. Despite the shortened working week due to holidays, the Sensex overall dropped by 1605.44 points, or 2.15%. This decline was reflected in the market capitalization of companies. If the total market capitalization on the BSE was ₹472,62,167.42 trillion on October 16, it reduced to ₹451,83,393.14 trillion over four working days, corresponding to a loss of about ₹20.79 trillion.

There are five key factors that have led to the sustained fall of the Indian stock market over four days. Firstly, growing tensions in the Middle East, causing investor concern over potential US-Iran tensions and threats of American strikes on Israel. Secondly, the sharp rise in crude oil prices; Brent Crude reached $116.73 per barrel, increasing the risk of inflation in India. Thirdly, inflation fears related to expensive fuel intensified selling in the market. The fourth factor is the downturn in American stock markets, which prompted Indian investors to exercise caution. Finally, the weakening rupee and rising yields on US bonds added anxiety for investors and put pressure on the domestic market.

The primary reason for the stock market decline is the significant jump in crude oil prices. Increasing geopolitical instability in the Middle East raises the probability of oil supply disruptions. On Friday, the price of Brent Crude rose by approximately 3%, reaching $116.73 per barrel, exceeding the $116 mark. The rise in oil prices to a five-month high caused concern among investors. Siddharth Kemka, Head of Wealth Management at Motilal Oswal Financial Services, noted that geopolitical tensions and high crude oil costs could continue to pressure the Indian market.

The risk of increased inflation due to rising oil prices can affect the economy and company costs. Tensions between the US and Iran, setbacks in diplomatic negotiations, and reports of possible new American strikes on Iranian nuclear and military targets have heightened uncertainty. Furthermore, supply concerns intensified after Houthi attacks on Saudi Arabian oil facilities from Yemen.

On Friday, shares of Tata Steel and Adani Ports were among the most affected companies listed in the Sensex, falling by more than 3%. In addition to them, shares of Trent, Tech Mahindra, Bharat Electronics Limited (BEL), Indigo, Bajaj Finserv, Kotak Mahindra Bank, Titan, Bajaj Finance, NTPC, State Bank of India (SBI), and Hindustan Unilever also closed lower. Nevertheless, some stocks showed growth: Eternal, Larsen & Toubro (L&T), Reliance Industries, Tata Consultancy Services (TCS), Ultratech Cement, Asian Paints, Maruti Suzuki India, Infosys, and ICICI Bank closed with positive momentum.

Ankur Punj, Managing Director of Equirus Wealth, stated that the downturn in American stock markets made Indian investors more cautious. This decline, combined with the rise in global crude oil prices and the weakening rupee, intensified selling pressure. He added that although most Asian markets showed improvement, India remained concerned about inflation due to expensive crude oil and rising US bond yields, which impacted the domestic market.

Next week, investors will also be watching the listing of Jio Platforms shares. The company's IPO, valued at ₹30,213 trillion, was subscribed 22.19 times. The shares are planned to be listed on BSE and NSE on October 28. The listing may provide insight into market trends. Additionally, investors will closely monitor the Federal Reserve System meeting scheduled for October 27 and 28. Market sentiment may also be influenced by initial unemployment data in the US, GDP growth figures, and the Bank of Japan's decision on interest rates. Second-quarter results from companies will also be crucial in determining the market direction. Results for companies such as Paytm, Tata Consumer, L&T, Maruti Suzuki, Hindustan Unilever, Adani Ports, Trent, Sun Pharma, Bharat Electronics Limited, and others will be announced next week.

Currently, the market direction is being determined by crude oil prices and events in the Middle East.

A decline was observed in the stock market on the last trading day and throughout the fourth consecutive session. The Sensex index fell by 1250 points from its daily high, but after the market closed, it showed a significant recovery. Nevertheless, investors in the Indian market incurred losses amounting to about 700 billion rupees.

The market capitalization of the BSE reached 458 billion rupees on Thursday, and by Friday, it decreased by approximately 700 billion rupees to 451 billion rupees. The main reason for this sharp drop was the massive sell-off of stocks in the small and mid-cap segments.

After the sharp fall on Friday, the BSE Sensex recovered, declining by only 125 points and settling at 73,123.83. The Nifty index dropped by 87 points, reaching the level of 22,600. Previously, Nifty had touched the lower level of 22,372, and Sensex had touched 72,452.37.

On Friday, stocks of mid-cap and small-cap companies experienced a serious decline. At the close of trading, the BSE 150 Midcap index fell by 2.10%, closing at 15,143.47, while the BSE 250 Smallcap declined by 2.68%, ending trading at 6,440.65. Shares of Jammu & Kashmir Bank lost more than 16 percent, while Swiggy shares fell by approximately 17%. These two companies became the stocks of the day in the mid-cap and small-cap sectors.

Most stocks in the small and mid-cap segments were in a decline zone of more than 3 percent on Friday, leading to a significant reduction in investor portfolios. Among the top 30 BSE stocks, the largest drop was recorded by Tata Steel, which fell by 3.21 percent. Twenty stocks closed in the red, and the remaining ten closed in the green. Eternal's shares, conversely, closed with a gain of about 4 percent.

The primary reason cited for the decline is the crude oil situation, whose price reached $115 per barrel. Brent Crude Oil rose by 1.33% on Friday, reaching $114.67 per barrel. This rise is attributed to the Houthi attack on Saudi Arabia. Furthermore, foreign investors continue to increase their selling. On October 22, foreign investors sold Indian stocks worth 16,113.89 crore rupees, while DII supported the market by buying stocks worth 14,519.12 crore rupees.

Large-scale selling was observed among both retail investors and foreign participants in the small and mid-cap segments. The results of some companies' reports also influenced the market.