Sixth Consecutive Slide for Indian Stocks Amid Market Consolidation

Indian stock markets continued their decline on Monday, affected by consolidation after a previous bull run. Sensex dropped by 638 points, and Nifty fell by 219 points. Experts cite high valuation corrections, rising oil prices, and geopolitical tensions as key factors. The upcoming RBI policy decision will be crucial.

Indian stock indices ended in the red on Monday, marking their sixth consecutive session of losses. Analysts have attributed this downturn to a period of consolidation following a recent bullish phase. The Sensex concluded the day at 81,050.00 points, a decline of 638.45 points or 0.78%, while the Nifty closed at 24,795.75 points, falling by 218.85 points or 0.87%.

The decline was broad-based, with every sectoral index except IT registering losses. Nifty media, metal, PSU bank, and oil and gas were among the biggest losers. Meanwhile, Nifty bank and mid-cap indices dipped around 2%. Over the past week, both Sensex and Nifty have decreased by 4-5% each.

Vinod Nair, Head of Research at Geojit Financial Services, noted that the Indian markets have entered a consolidation phase, posing high risks of underperformance compared to Asian peers. Factors such as premium valuations, significant global arbitrage activity, and inflows into attractive Chinese markets have contributed to this phase. Additionally, geopolitical turmoil and rising oil prices compound domestic economic challenges in the short term.

This recent decline is also linked to heightened tensions in the Middle East following an attack on Israel by Iran. Prior to this slump, the loosening of the US Federal Reserve's interest rates by a notable 50 basis points was providing some support to Indian stocks.

Meanwhile, continuous purchasing by Foreign Portfolio Investors (FPIs) aided the indices slightly, as FPIs maintained positive investments in the Indian stock market for the fourth consecutive month through September. Investors are now eagerly awaiting the Reserve Bank of India's (RBI) monetary policy outcome scheduled for Wednesday. The RBI has kept the repo rate stable at 6.5% for nine consecutive meetings.

(With inputs from agencies.)