The Indian stock market opened the week with a downward trajectory as the Sensex and Nifty shed almost 1% each, marking a cautious start to an action-packed week that promises significant global economic and political developments. Both indices were impacted by a sell-off in blue-chip stocks, including Reliance Industries, Infosys, HDFC Bank, and ICICI Bank, contributing to the broader market sentiment that was skewed heavily toward lagging stocks.

By 09.45 am, the Sensex was down by 781.26 points, or 0.98%, at 78,942.86, while the Nifty declined by 249.80 points, or 1.03%, settling at 24,054.50. Market breadth revealed that declines far outpaced gains, with approximately 2,237 stocks falling compared to 999 that rose, and 134 remaining unchanged. This week's focus will be on major international events, particularly the US Presidential election set for November 5 and the Federal Reserve's monetary policy announcement on November 7.

Global Events on the Horizon

The Federal Reserve's upcoming decision, with a quarter-percentage-point rate cut widely expected, and the US Presidential election are key events that investors are monitoring closely. The election, one of the most contentious in recent American history, has heightened global uncertainty as its outcome could drive policy shifts in the US, potentially affecting international markets. According to Deepak Jasani, Head of Retail Research at HDFC Securities, these dual events are creating an environment of caution in global markets, adding volatility to domestic trades.

Simultaneously, investors are also keeping a close eye on China, where stimulus announcements are anticipated on Friday following a meeting of the standing committee of the National People’s Congress, the country's parliament. As China navigates economic challenges, any move to inject liquidity or stimulate growth could impact Asian and global markets.

Impact on Commodity and Oil Prices

Oil prices have seen a boost of almost 2%, gaining over $1 per barrel following an announcement by OPEC+ that it would delay its scheduled December production increase by one month due to softening demand and rising output from non-OPEC countries. This decision has given oil prices a temporary lift, reflecting OPEC+'s response to manage global oil supply amid fluctuating demand.

Volatility and Market Sentiment

The uncertain market environment was also evident in the sharp rise in the India VIX, commonly referred to as the 'fear gauge', which saw an increase of more than 5% and hovered above the 16-point mark. This surge indicates heightened market volatility and a cautious stance among investors, who are waiting for more clarity on both domestic and global fronts.

Broad Market Weakness and Sectoral Performance

Beyond the headline indices, the broader market, encompassing both mid-cap and small-cap stocks, was also under pressure. The BSE Smallcap and Midcap indices reflected declines of around 1%, mirroring the downward trend seen in larger stocks.

Heavyweight companies significantly contributed to the downward trend. Bajaj Auto was among the top laggards on the Nifty, falling nearly 5% after reporting an 8% decrease in domestic sales for October. Similarly, Sun Pharma dropped around 4% after a US court ruling posed a legal hurdle for its planned drug launch, adding pressure on the index. Other significant contributors to the indices' slide included RIL, ICICI Bank, and Infosys, each declining by 1-2%.

Top Gainers and Sector-Wide Impact

In an otherwise red market, select stocks managed to buck the trend, with M&M, Tech Mahindra, Cipla, and HCLTech emerging as the top gainers on the Nifty, each up by 1-2%. Nonetheless, most sectoral indices struggled, particularly the automobile, banking, pharma, infrastructure, energy, and realty sectors, all of which reported losses in the range of 1-2%.

In sum, the Indian stock market faces a critical week as key global events—specifically the US Presidential election and Federal Reserve meeting—loom large. The high volatility seen early in the week reflects investor apprehension, underscored by weakness across both blue-chip and broader market stocks. While select stocks like M&M and Tech Mahindra found upward momentum, the broader market sentiment remains cautious as investors await the outcome of global events and potential domestic economic updates.

This uncertain environment, intensified by international and sector-specific challenges, has created a cautious market approach as participants evaluate the potential impact on long-term growth trajectories and short-term trading opportunities.

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