The Indian stock market closed the week on a lower note, with Nifty 50 and Sensex both witnessing declines driven by a sell-off in auto and banking stocks. While pharma and metal sectors provided some relief, it wasn’t enough to halt the downtrend. Nifty 50 closed below the 25,000 mark for the third consecutive day, ending at 24,964, down 0.14%, while the Sensex fell by 0.28% to settle at 81,381.
As we move into the third week of October, investors will keep a close watch on several key market drivers. These include the Q2 earnings for fiscal year 2024-25, ongoing geopolitical tensions involving Israel and Iran, foreign fund outflows, crude oil prices, and important global and domestic economic indicators.
Market Highlights for the Week
Both Nifty 50 and Sensex ended in the red this week, recording losses of 0.20% and 0.40%, respectively. Investor sentiment remained subdued due to concerns surrounding the Middle East conflict, foreign portfolio investor (FPI) outflows, worries about an earnings slowdown, and high market valuations.
In October, Nifty 50 has dropped 3.28%, marking its steepest monthly decline since December 2022. From its recent high of 26,277, the index has fallen by 5.34%. Similarly, the Sensex has dropped by 5% from its peak, with a 3.46% monthly decline so far.
Market experts suggest that Nifty 50 is trying to establish a base, with critical support at the 24,750–24,800 range. However, should the index breach these levels, further selling pressure could push it towards 24,500. On the upside, resistance is expected at 25,250, where a breakout could lead to a rally toward 25,600. The outlook for the week is neutral to bullish, favoring a buy-on-dips strategy.
Key Triggers for the Upcoming Week
- Q2 Results: Corporate earnings will take center stage, with prominent companies like Reliance Industries, Infosys, Axis Bank, Wipro, and HDFC Bank scheduled to announce their Q2 results for FY25. These reports are expected to influence sector-specific movements in the market.
- IPOs: The primary market will be active with the launch of three new initial public offerings (IPOs). Hyundai Motor India is leading with a massive ₹27,000 crore IPO, marking the automaker’s largest offering to date.
- FII Activity: Foreign institutional investors have been net sellers in October, reflecting a ‘Sell India, Buy China’ strategy following China’s monetary and fiscal stimulus measures. As a result, Indian equities have seen sustained FPI outflows, but domestic institutional investors (DIIs) have absorbed much of the selling pressure.
- Global Cues: Geopolitical developments in the Middle East, oil price fluctuations, and economic data from major economies, including the US, China, and the UK, will also be key influences on market movements.
- Oil Prices: Crude oil prices saw a slight dip last week but posted a second consecutive weekly gain due to concerns over supply disruptions in the Middle East and the impact of natural disasters in the US. These developments will continue to be a crucial factor in market dynamics.
Technical Outlook
Technically, Nifty 50 is attempting to form a bottom near the 24,750 level. Breaking above 25,250 could set the stage for a move towards 25,600. Conversely, a drop below 24,750 may invite further selling pressure, potentially driving the index down to 24,100. In the banking sector, Bank Nifty is holding its psychological support at 50,000, with immediate resistance at 51,700.
Overall, the outlook for the next week remains cautiously optimistic, with a focus on key earnings reports and geopolitical developments that could shape market sentiment.
