Mumbai Market Witnesses Significant Volatility

On Friday, Dalal Street experienced a rollercoaster day with the Sensex swinging over 2,100 points intraday, ultimately closing 843 points higher at 82,133 points - a two-month high. The surge was fueled by strong foreign portfolio investor (FPI) buying worth Rs 2,335 crore, according to BSE data.

The Sensex opened marginally lower at 81,212 points but faced strong selling pressure, dipping to 80,083. However, a robust recovery ensued, peaking at an intraday high of 82,214 points just before closing, marking a 1% increase for the day.

Sectoral Support and Market Sentiment

Siddhartha Khemka, Head of Research (Wealth Management) at Motilal Oswal Financial Services, noted that buying in FMCG, IT, and banking stocks supported the recovery, despite broader market sentiment remaining cautious. "The intraday selloff in Indian equities was influenced by weakness across Asian markets, driven by a stronger dollar, rising US Treasury yields, and skepticism over China's economic revival," he explained.

Looking Ahead: Key Indicators and Global Factors

While FPIs were net buyers during the session, market players remain uncertain about the sustainability of such buying in the short term. Factors such as US Treasury yields, the rupee's performance against the dollar, and crude oil prices are expected to continue influencing market trends. Investors will also be closely monitoring key economic indicators like manufacturing and services PMI for the US and India, as well as domestic WPI inflation.

Despite an adverse base effect, October 2024's IIP growth improved marginally to 3.5%, highlighting the impact of US economic policy, domestic consumption and investment recovery, and CPI inflation as key focus areas in the coming months. Additionally, the market will be watching the new US administration's policies once Donald Trump takes office in January.