As per the NSE data, FIIs cumulatively bought ₹7,580.65 crore of Indian equities, while they sold ₹8,077.86 crore — resulting in an outflow of ₹497.21 crore on Tuesday. Meanwhile, DIIs infused ₹8,596.01 crore and offloaded ₹7,895.73 crore, registering an inflow of ₹700.28 crore.
FIIs have sold Indian equities since October on record-high US bond yields, strength of the dollar index, and the geopolitical risks due to the Israel-Hamas war. These combined factors have since weighed on market sentiment.
However, the US Federal Reserve‘s decision to hold has emboldened the bulls to make a strong comeback in the mother market US with S&P rising 1.9 per cent yesterday, according to market analysts. Because of the US Fed’s dovish commentary, US 10-year bond yields and crude oil prices have come down.
Selling streak to reverse soon, FIIs may turn buyers: Analysts
Analysts reckon that the Indian market continues to exhibit resilience even in the midst of several challenges and there is a growing concern among foreign investors that if they continue to sell, they will miss out on the potential rally in the Indian market. This might restrain the FIIs from selling heavily in the coming days.
Stable crude, steady dollar, down trending US bond yields and declining gold are indicators of stability in markets. Due to these reasons, FII selling has been subdued in the past few sessions, yet they have still remained net sellers so far in November.
Experts project short covering by FIIs in the near-term as they turn buyers over positive global cues. With Brent crude crashing to below $85 per barrel-mark and the pause in rate hike by the Fed, foreign investors may start buying Indian equities soon, said analysts. This could lead to short covering which can take markets higher despite the uncertainty surrounding the Israel-Hamas conflict.
Stock Markets Today
Domestic equity benchmarks Sensex and Nifty 50 snapped their three-day winning run on profit booking today in select heavyweights amid weak global cues as optimism around the end of monetary tightening faded.
‘’The market witnessed some resistance at higher levels as caution prevails due to the start of the key state elections, and further negative global cues on account of a more than expected fall in Chinese exports, highlighting a continued slowdown in global trade,” said Vinod Nair, Head of Research at Geojit Financial Services.
‘’Despite the extension of supply cuts by Saudi Arabia and Russia, crude oil prices moderated, a positive for India in the midst of geopolitical tension. This, along with the moderation in US bond yields and the positive ongoing earnings season, will support long-term returns,” added Nair.
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Nifty 50 closed at 19,406.70, down 5 points, or 0.03 per cent, while Sensex settled at 64,942.40, down 16 points, or 0.03 per cent. Mid and smallcaps clocked decent gains, outperforming the benchmark indices. The BSE Midcap index ended with a gain of 0.53 per cent and the Smallcap index rose 0.38 per cent.
According to analysts, investors have to appreciate the fact that the rally in small and midcaps is primarily driven by retail buying on every dip.
‘’The explosive growth in demat accounts which have touched 132 million now is playing a major role in the rally in the broader market while the large caps are under pressure from FII selling,” said Geojits’ Dr. V K Vijayakumar.
‘’But large caps particularly ICICI Bank, HDFC Bank, RIL, Tata Motors, Bajaj Auto, L&T and Bajaj Finance have fundamental strength reinforced by the Q2 results. FIIs turning buyers in India is only a question of time. When that happens, large caps will outperform the broader market,” he added.
Where are markets headed?
Market has shown resilience at lower levels, despite subdued global environment. ‘’We expect market to gradually move upwards given strong Indian economy and heathy earning season,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services. Investors now await US Fed Chair Powell’s commentary which is scheduled on Thursday for future direction
Technically, the confirmation of strength for Nifty can be seen only above its biggest hurdles at 19707 mark, while support is placed at 19225 mark, according to Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
Ajit Mishra, SVP – Technical Research, Religare Broking Ltd said, ‘’We may see further consolidation in the index in line with the global peers however there will be no shortage of stock-specific opportunities. Traders should align their positions accordingly, with a focus on sectors that are trading in sync with the benchmark.”
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 07 Nov 2023, 10:25 PM IST