Markets dip amid persistent foreign fund outflows and US election concerns

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The Indian stock markets experienced a decline in early trading on Tuesday, attributed to sustained foreign fund outflows and investor caution ahead of key events in the United States, such as the presidential election and the Federal Reserve's anticipated interest rate decision, as per PTI.

The BSE Sensex dropped by 326.58 points, reaching 78,455.66, while the NSE Nifty slipped by 86.7 points to 23,908.65 in early trade. According to PTI, within the 30-share Sensex pack, major decliners included Adani Ports, ITC, Reliance Industries, HDFC Bank, Power Grid, and Hindustan Unilever. However, shares of JSW Steel, Tata Steel, IndusInd Bank, Tata Motors, Maruti, and Sun Pharma showed gains, offering a degree of support in an otherwise pressured market.

PTI reports that Foreign Institutional Investors (FIIs) withdrew significant amounts on Monday, offloading equities worth Rs 4,329.79 crore, according to exchange data. These consistent outflows have continued to impact investor sentiment, compounded by anticipation of potential volatility in global markets, especially with major US events on the horizon.

Across Asian markets, a mixed sentiment was observed. According to PTI, Tokyo, Shanghai, and Hong Kong markets opened positively, while Seoul was trading lower. US markets closed on a negative note on Monday, adding further cautionary signals for global investors.

Prashanth Tapse, Senior Vice President (Research) at Mehta Equities Ltd, explained that global investors are "bracing for heightened market volatility" as the US heads into a closely contested presidential election. The outcome, he noted, could influence global financial markets significantly. Adding to the caution is the upcoming announcement from the Federal Reserve regarding its interest rate decision later this week.

The global oil benchmark, Brent crude, climbed by 0.12 percent to USD 75.17 per barrel, according to PTI. Rising crude prices are another factor weighing on market sentiment, given the implications for India's import-dependent energy sector.

On the domestic front, markets had already witnessed a significant dip on Monday, with the BSE Sensex plummeting by 941.88 points or 1.18 percent to settle at 78,782.24 - the lowest closing level since August 6. Meanwhile, the Nifty dropped by 309 points, or 1.27 percent, to close at 23,995.35, as per PTI.

Vikas Jain, Head of Research at Reliance Securities, mentioned that investor sentiment remains highly cautious ahead of the US Federal Reserve's interest rate decision and the presidential election, both events which are expected to shape market directions in the near future.

As per PTI, these developments underscore a challenging week for Indian equities, with investors closely monitoring both domestic and global cues as they assess potential risks and opportunities.