Sensex, Nifty 50 crash; investors lose ₹6 lakh crore; 5 factors why Indian stock market fall today

Stock market today: The Indian stock market witnessed an across-the-board selloff on Monday, November 4, with the benchmarks- the Sensex and the Nifty 50—crashing over 1 per cent each and the mid-and small-cap segments plunging up to 2 per cent.

The Sensex opened at 79,713.14 against a previous close of 79,724.12 and crashed nearly 2 per cent to the level of 78,232.60. The Nifty 50 opened at 24,315.75 against its previous close of 24,304.35 and fell 2 per cent to the level of 23,816.15.

Eventually, the Sensex closed 942 points, or 1.18 per cent, lower at 78,782.24, while the Nifty 50 closed with a loss of 309 points, or 1.27 per cent, at 23,995.35.

The BSE Midcap and Smallcap indices fell 1.31 per cent and 1.65 per cent, respectively.

The overall market capitalisation of BSE-listed firms dropped to nearly ₹442 lakh crore from ₹448 lakh crore in the previous session, making investors poorer by about ₹6 lakh crore in a single session.

In the Nifty 50 index, as many as 42 stocks ended with losses, with shares of Hero MotoCorp, Grasim, Bajaj Auto, Adani Ports and Special Economic Zone and BPCL as the top losers, falling 3-4 per cent.

Mahindra and Mahindra, Tech Mahindra, Cipla and SBI ended as the top gainers in the index, rising 1-2 per cent.

Sectoral indices today

Among the sectoral indices, Nifty Realty, Oil & Gas and Media fell over 2 per cent. Nifty Bank, Auto, Financial Services, FMCG, Metal, Private Bank and Consumer Durables fell 1 per cent.

Volatility index India VIX jumped 5 per cent to the level of 16.70.

What is driving the Indian stock market down today?

Experts pointed out these five key reasons behind the market crash today:

1. Caution ahead of the US election

The market is reacting to the US election-related nervousness. There is uncertainty about the outcome of the election as opinion polls indicate a tight fight between Democratic candidate Kamala Harris and Republican Donald Trump.

"In the next couple of days, markets globally will be focused on the US presidential elections, and there can be near-term volatility in response to the election outcome. However, this is likely to be short-lived and economic fundamentals like US growth, inflation, and the Fed action will influence the market trend," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

2. Valuations still uncomfortable

Despite the recent correction, experts do not see a significant comfort on the valuation front. According to the equity research platform Trendlyne, the current PE (price-to-earnings) ratio of Nifty 50 at 22.7 is above the two-year average PE of 22.2 and near the one-year average PE of 22.7.

"The recent correction has not significantly changed the rich multiples of the overall market. They are here to stay largely because of India's long-term growth and comfort. In terms of stock-specific, things have become much better because stock-specific corrections have been much higher," said Pankaj Pandey, the head of research at ICICI Securities.

3. The Fed factor

The US Federal Reserve's policy outcome is scheduled for November 7, with experts anticipating a 25-basis-point rate cut. However, this may not move the market, as it is likely already priced in.

"Largely, the expectation is that the US Fed will go for a 25 bps cut, but all that could get negated because both the candidates of the US election are talking of a good amount of spending, so the fiscal deficit is going to be higher, which is why bond yields have jumped higher. This is not great news for the market," said Pandey.

4. Weak Q2 numbers

India Inc.’s September quarter results have been weaker than expected, raising investor concerns about the market outlook.

"Earnings have been a bit soft, largely driven by commodities, which is impacting the overall market sentiment at this point in time," said Pandey.

"The Indian market is facing headwinds from decelerating earnings growth. Nifty EPS (earning per share) growth, as indicated by Q2 results, may dip below 10 per cent in FY25, which will render the present valuations of about 24 times estimated FY25 earnings difficult to sustain. FIIs may continue to sell in this difficult earnings growth environment, constraining any rally in the market," said Vijayakumar.

5. Sharp selloff by FPIs

The Indian stock market is witnessing a heavy selloff from foreign portfolio investors (FPIs), while domestic institutional investors (DIIs) are also cautious ahead of the major global events this week.

"Nifty and Sensex have resumed their downward trend after a week of consolidation, largely due to heavy selling by FIIs. The expectation of another stimulus package from China is driving fund outflows from India to China, while FIIs are also booking profits ahead of the significant upcoming US elections. Additionally, DIIs appear to be on the sidelines amid these major global events," said Santosh Meena, Head of Research, Swastika Investmart.

Technical outlook for Nifty 50

Experts point out that the Indian stock market has made several attempts lately to break the negative momentum, but it has failed because of a lack of fresh triggers.

Anand James, Chief Market Strategist at Geojit Financial Services, noted that while the 24,150 level repeatedly held firm last week, preventing further declines, upward momentum was clearly weak. This was due to resistance in the 24,470-24,540 range, with additional obstacles nearby at 24,660-24,770.

"While we expect these levels to be challenged this week, the broader trend now requires multiple days of close above 25,100 to fully abandon the sell-on-rallies approach that continues to be the dominant theme. Alternatively, the inability to float above 24,470 or a direct fall below 24,150 will expose 23,900-23,300. Either way, Nifty 50 appears ready to move out of the 24,150-24,470 region this week," said James.

According to Vishnu Kant Upadhyay, AVP - Research and Advisory at Master Capital Services, the market remains below its 100-day EMA (exponential moving average), adding to the bearish outlook. A hold above 23,500 could indicate bargain buying, while a sustained move above 24,500 may trigger short covering, signalling a possible end to the downtrend. Conversely, a decisive break below the 23,500–23,400 range could push prices down to 22,800.

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