5 reasons why Sensex, Nifty are falling today; Stock market strategy ahead of US elections

Stocks were on edge Monday morning amid uncertainty about the U.S. election, with Republican Donald Trump neck-and-neck with Democrat Kamala Harris in the presidential race. The cut in India Inc.’s FY25 earnings estimates, strong external outflows, record low rupee and rise in oil prices due to delays in OPEC+’s production increase and geopolitical tensions have triggered selling pressure in domestic equities.

BSE Sensex was trading at 78,854.96, down 869.16 points or 1.09 per cent. NSE Nifty was traded at 24,036.90, down 267.45 points or 1.1 percent. Reliance Industries Ltd, ICICI Bank Ltd and Infosys Ltd contributed the most to the decline in the index.

“The Indian market is facing headwinds from slowing earnings growth. Based on Nifty’s Q2 results, FY25 earnings per share growth may fall below 10 per cent in FY25, making estimated FY25 earnings around “Continuing to sell in this difficult earnings growth environment is limiting any upside in the market,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services, which would make it difficult to sustain current valuations of 24 times.

Continuing to invest in highly valued large-cap stocks is the safe option for investors in this difficult situation,” said Vijayakumar.

Data showed that FPI sold shares worth Rs 1,13,858 crore in October; This was the highest ever absolute sales by FPIs in a month. This incessant selling largely contributed to benchmark indices falling nearly 8 percent from their peak. Earnings disappointment plays a role in this trend.

Among Nifty stocks, BPCL has seen a 34.3 per cent downgrade in its FY25 EPS estimates since its second-quarter results, followed by IndusInd Bank (16.7 per cent), UltraTech Cement (15.5 per cent), NTPC (8 per cent, 3), followed by Coal India (7.3 percent). Maruti Suzuki with 6.4 percent, Nestle India with 6.1 percent and Reliance Industries with 5.6 percent. As of October 31, 34 Nifty stocks reported 5 per cent sales growth, 1 per cent EBITDA growth and zero growth in PAT growth. Of these, 10 were exceeded and nine companies missed their PAT estimates, MOFSL said. On the Ebitda front, eight companies exceeded MOFSL’s quarterly forecasts, while seven companies failed to meet.

In the case of the US elections, Trump’s win could trigger a short-term rise, but analysts are unsure whether such a rise will continue.

“A Democratic Sweep could trigger a new wave of selling and a significant correction (5 per cent) should be bought from here – the impact on the Indian economy and markets is marginal. The medium-term outlook for India may not be different for either the Democrat or Republican regime,” Emkay Global said.

The rupee is hovering around 84.1, an all-time low against the dollar in Friday’s session. A weaker currency could trigger more foreign outflows.

Brent crude oil futures on Monday rose 2 percent to $74 a barrel after OPEC+ postponed its December production increase by a month due to tensions in the Middle East. There are also concerns about the flare-up of Iran-Israel hostility, and this may affect crude oil prices in the coming period.

“As the world moves through an upcoming period of high growth and inflation volatility, possibly redefining traditional investment tactics, we believe India’s investment strategy may be no different, even if it enjoys some structural growth levers compared to its emerging peers.” Emkay Global said.