Sensex Falls for Fourth Straight Session; PE Ratio Hits Multi-Month Low

Sensex Closes in Red: A Fourth Straight Session Decline

The BSE benchmark Sensex ended the trading session on Monday, November 18, 2024, in the red, marking its fourth consecutive day of losses. The index closed below 77,350, with intraday levels touching lows last seen on June 24. Investor sentiment remained dampened as the broader market struggled to find positive triggers.

IT Majors TCS and Infosys Lead the Decline

Information technology heavyweights TCS and Infosys were the primary laggards dragging the Sensex down. The IT sector saw a sell-off after US Federal Reserve Chairman Jerome Powell reiterated that the Fed is in no hurry to reduce interest rates. Powell’s statement put pressure on IT stocks, as higher interest rates in the US impact the growth prospects of companies reliant on international markets.

Foreign Fund Outflows Add to the Woes

Another major factor contributing to the fall was the persistent outflow of foreign funds. Foreign institutional investors (FIIs) have been pulling back from Indian equities amidst global uncertainty, further weighing on market sentiment.

PE Ratio Dips to 3-Month Low

The Sensex’s price-to-earnings (PE) ratio dropped to a 3-month low of 22.16, falling below its three-month average of 23.64 and its six-month average of 25.97. This decline in the PE ratio indicates a broader concern over weakening earnings momentum.

Subdued Earnings and Investor Sentiment

The September quarter results have been lackluster, further fueling negative sentiment among investors. Earnings across several sectors failed to meet expectations, raising questions about future growth and justifying the subdued valuations. The below-average PE ratio reflects these growing concerns and the cautious stance of market participants.

Outlook for the Market

As global uncertainties and domestic earnings concerns persist, Sensex may remain under pressure in the near term. Investors will likely keep an eye on upcoming corporate earnings, macroeconomic indicators, and updates from the US Federal Reserve to gauge the market’s direction.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.