Market Commentary - Mid-Session
Indices trade with deep cuts; VIX jumps 6.56% As on : 03-Oct-24  09:32

The key equity indices traded with major losses in early trade amid mixed cues from global markets and fears of full fledged war between Iran and Israel. The fall was also triggered by SEBI's new F&O rules. The Nifty traded below the 25,600 level. Barring the Nifty Metal index, all the other sectoral indices on the NSE traded in the red.

At 09:30 IST, the barometer index, the S&P BSE Sensex, was down 706.72 points or 0.84% to 83,559.57. The Nifty 50 index slipped 206.05 points or 0.80% to 25,590.85.

In the broader market, the S&P BSE Mid-Cap index shed 0.80% and the S&P BSE Small-Cap index declined 0.67%.

The market breadth was weak. On the BSE, 943 shares rose and 2,165 shares fell. A total of 113 shares were unchanged.

Foreign portfolio investors (FPIs) sold shares worth Rs 5,579.35 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 4,609.55 crore in the Indian equity market on 1 October 2024, provisional data showed.

The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, advanced 6.56% to 12.78.

SEBI's new F&O rules:

The Securities and Exchange Board of India's (SEBI) introduced a six-step plan to curtail retail participation in speculative index derivatives. This could result in a significant decline in trading volumes. New regulations require traders to maintain higher margins, potentially hindering their ability to take on larger leveraged positions. Moreover, the reduction of weekly options expiries to one per exchange could lead to decreased revenues for exchanges and brokers. This change means that each exchange will only offer weekly contracts for one benchmark index instead of the current two to four. These measures are designed to reduce excessive speculation in the futures and options (F&O) segment, where retail investors often find themselves on the losing end of trades.

Stocks in Spotlight:

Hero Motocorp declined 0.53%. The company reported motorcycle sales of 5.97 lakh units in September 2024, jumping 21% YoY. Scooter sales stood at 39,521 unitsin September 2024, down 6% YoY. Domestic sales reached 6.16 lakh units in September 2024, up 19% YoY while exports jumped 22% to 20,344 units in September 2024.

Maruti Suzuki India fell 1.28%. The company's total sales stood at 1.84 lakh units in September 2024, reflecting a year on year increase of 1.9%. Domestic sales declined 1.2% YoY to 1.57 lakh units while exports jumped 23% YoY to 27,728 units in September 2024.

Dabur India tumbled 5% to Rs 588 after the firm stated that it expects to see a negative impact on consumer offtake in the second quarter due to heavy rains and floods across the country, particularly affecting the beverage category. As a result, the company anticipates a mid-single-digit decline in consolidated revenue and expects operating margins to decrease in the mid- to high teens range.

Numbers to Track:

The yield on India's 10-year benchmark federal paper advanced 1.87% to 6.858 as compared with previous close 6.732.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 83.9350, compared with its close of 83.8275 during the previous trading session.

MCX Gold futures for 4 October 2024 settlement shed 0.19% to Rs 75,520.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, was up 0.09% to 101.77.

The United States 10-year bond yield rose by 0.13% to 3.793.

In the commodities market, Brent crude for December 2024 settlement added 78 cents or 1.06% to $74.68 a barrel.

Global Markets:

Asian stock market exhibited mixed trends on Thursday, mirroring a cautious sentiment across global markets amid escalating tensions in the Middle East. Japan's Nikkei 225 surged over 2%, while markets in China and South Korea remained closed for a holiday.

Geopolitical tensions in the Middle East have spiked following Iran's missile attack on Israel on October 1. Israel's subsequent ground incursions into Lebanon targeting Hezbollah, an Iran-backed militia group, have exacerbated concerns about potential oil supply disruptions and increased uncertainty in global financial markets.

In the United States, stock markets closed with modest gains on Wednesday. The tech-heavy Nasdaq Composite rose slightly by 0.08%, while the S&P 500 and Dow Jones Industrial Average inched up by 0.01% and 0.09%, respectively. Investor caution persisted, however, due to Middle East tensions and the anticipation of additional US labor data.

Key US tech stocks witnessed mixed performance. Nvidia gained 1.6%, while Tesla experienced a 3.5% decline. Humana Inc. and Nike faced significant losses, with drops of 11.8% and nearly 7%, respectively.

The ADP National Employment Report indicated that US private payrolls grew more than expected in September, adding 143,000 jobs. This surpassed economists' forecasts and highlighted the strength of the US labor market despite broader economic uncertainties.

The US job market's resilience was further underscored by the unexpected increase in job openings in August. The Job Openings and Labor Turnover Survey (JOLTS) revealed a rebound of 329,000 job openings, exceeding analysts' expectations. While hiring declined slightly, layoffs decreased.

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