Markets extend losses: NIFTY50 falls 400 points, SENSEX trades below 83,000; here's why

Indian equity benchmarks extended losses in morning deals dragged by a decline in heavyweight stocks Asian Paints, Tata Motors and Maruti Suzuki. Escalating tensions in the Middle East, coupled with the implementation of changed norms for trading in index derivatives, also weighed on market sentiment.

Top three reasons for the fall

FII selling pressure

Foreign Institutional Investors (FII) have resumed their selling in Indian equity markets in October after posting biggest buying numbers for 2024 in September. The resumption in selling was largely driven by euphoric rally in Chinese stock markets which was led by spree of stimulus measures by Chinese central bank. Increased liquidity flow and cheaper valuations make China an attractive investment option for Foriegn institutional investors when compared to other emerging market economies like India, Vietnam, South Korea and more. These factors are leading to FII's shifting incremental exposure to China from India leading to fall in Indian equity markets.

Rising geopolitical tensions in the Middle East

The recent strike by Iran on Israel has triggered full-fledged warlike conditions in the Middle East region. Iran launched nearly 200 missiles toward Israel's important military and defense facilities on Tuesday night, sparking a dramatic spike in crude oil and gold prices to new highs. Crude oil prices in foreign markets increased by approximately 7% in the wake of the attacks over the last two days.

Cautious outlook ahead of Q2 earnings season

Q2FY25 earnings season will begin next week, with big IT businesses such as TCS and Infosys reporting their results. On the other hand, the most recent PMI statistics for the manufacturing sector showed that manufacturing activity was lackluster in September. Automobile sales in September also fell on a month-over-month basis, raising concerns about the economy's slowing development.

As of 1:16 pm, The BSE Sensex is trading at 82,928, down by 1300 points or 1.54% after trading in a range of 83002.09 and 83752.81. Three stocks advanced on the index, while 27 stocks declined.

The broader indices were trading in red; the BSE mid-cap index fell 0.90%, while the small-cap index was down 0.87%.

The lone gaining sectoral index on the BSE was Metal(+0.39%), while Realty(-2.62%), Auto (-1.60%), Capital Goods (-1.32%), Consumer Disc (-1.32%) and Bankex (-1.20%) were the top losing indices on BSE.

Top gainers and loses in SENSEX

The top gainers on the Sensex were JSW Steel (+2.34%), Tata Steel (+0.75%), Ultratech Cement (+0.73%), SBI (+0.40%) and Sun Pharma(+0.29%). On the flip side, Asian Paints (-3.17%), Tata Motors (-2.33%), Maruti Suzuki (-2.17%), Axis Bank (-2.16%) and Larsen & Toubro (-2.10%) were the top losers.

The NIFTY50 is currently trading at 25398, down by 400 points or 1.5% after trading in a range of 25382.60 and 25639.45. The index had 10 stocks advancing and 40 stocks declining.

Top gainers and losers in NIFTY50

Global markets

On the global front, Asian markets are trading mostly in red as traders remain cautious about escalating tensions in the Middle East following Iran's ballistic missile attack against Israel.Hang Seng declined 700.55 points or 3.22% to 21,743.18, Jakarta Composite plunged 32.83 points or 0.43% to 7,530.43 and Straits Times fell 6.38 points or 0.18% to 3,578.29.

On the flip side, Nikkei 225 surged 775.84 points or 2.05% to 38,584.60.