Nifty, Sensex Fall as US Election and Fed Meeting Loom; FII Selling May Continue

Bears maintained their dominance on Dalal Street on November 5, driven by weak global signals, extending the previous session’s heavy sell-off. Investors remained wary ahead of a crucial week, with significant events like the U.S. presidential election and the Federal Reserve's policy meeting on the horizon.

At the opening, the Sensex fell by 237.53 points (0.30%) to 78,544.71, while the Nifty declined by 60.10 points (0.25%) to 23,935.20. Market breadth showed 911 shares advancing, 854 declining, and 100 remaining unchanged.

Leading gainers on the Nifty included Hindalco, JSW Steel, Tata Steel, Nestle, and HCL Tech, whereas major laggards were Coal India, Reliance, Trent, Titan Company, and Bharat Electronics.

Market sentiment is expected to remain subdued due to global events, persistent selling by Foreign Institutional Investors (FIIs), and lackluster earnings reports from domestic firms. The upcoming week will be pivotal, with key players like Dr. Reddy’s and Titan set to announce their earnings, likely causing stock-specific volatility.

Domestic challenges persist, as two-thirds of Nifty 50 companies missed Q2 earnings estimates. Consequently, Nifty 50’s FY25 earnings projections have been significantly revised down from 15% to under 10%.

This earnings downgrade has strained current valuations, which may sustain the ongoing FII selling, as noted by V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Vijayakumar suggested a cautious approach, recommending investments in resilient sectors. He highlighted promising prospects for select financial and auto stocks, including Eicher Motors and M&M.

Prashanth Tapse, Senior VP (Research) at Mehta Equities, advised caution, recommending sell positions on both Nifty and Bank Nifty, while favoring stocks like Lupin and Bank of Baroda for short-term gains.

Technical charts indicate a strong bearish signal, with a long bear candle forming and minor lower shadow, hinting at a significant downside breakout. Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, suggested that Nifty’s short-term trend remains bearish, with key support at 23,500 (200-day EMA) and resistance around 24,200.

For Bank Nifty, which saw a notable decline, Jatin Gedia of Sharekhan by BNP Paribas predicts a range-bound trade between 52,500 and 50,500, with support at 50,720 – 50,600 and resistance at 51,750 – 51,800.