Foreign outflow at ₹758 cr from Indian stocks; What’s triggering FII selling?

As per the NSE data, FIIs cumulatively bought ₹9,005.65 crore of Indian equities, while they sold ₹9,764.20 crore — resulting in an outflow of ₹758.55 crore. Meanwhile, DIIs infused ₹7,203.95 crore and offloaded ₹7,175.84 crore, registering an inflow of ₹28.11 crore.

Domestic equity benchmarks Sensex and Nifty settled at a more than one-month high on Thursday, led by gains in banks and power stocks, with a technical breakout lending support – even as global cues were weak amid concerns over higher interest rates for an extended period.

The domestic market is taking comfort from India’s robust growth outlook and expectations of easing inflation in the coming months. However, rising crude oil prices and poor monsoon pose a risk to markets.

Sensex closed 385 points, or 0.58 per cent, higher at 66,265.56 while the Nifty50 ended with a gain of 116 points, or 0.59 per cent, at 19,727.05. Mid and smallcaps also scored decent gains.

The BSE Midcap index closed 0.79 per cent higher at 32,374.93 after hitting its fresh record high of 32,396.28 during the session. The BSE Smallcap index rose 0.40 per cent to end at 38,101.21 after hitting its new all-time high of 38,169.65 during the session.

Today’s rally came despite weakness across the Asian and US markets, as investors remain upbeat about India’s long-term growth prospects, said analysts. ‘’Nifty has shown good momentum in September so far and is inching closer towards its life highs where it could face some resistance. However we expect outperformance in broader market to continue with interest in niche sectors,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services

What’s triggering FII selling?

DIIs have been consistent buyers on the back of good flows to domestic mutual funds. But FIIs have been consistently selling in the cash market this month with a net sell figure of ₹7,850 crore, according to analysts. 

‘’The FII selling has been triggered by the rising US bond yields and the strengthening dollar. With the yield from the US 10-year at 4.29 per cent and 2-year at 5 per cent, the FIIs are likely to sell further impacting market sentiments,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Notably, the domestic market initially opened today with a lacklustre performance over weak global cues. However, as the day progressed, a decline in US bond yields and crude oil prices injected some positivity into the market. 

The indices then rebounded sharply to maintain their upward bias for the fifth consecutive session, even as foreign inflows continued to be patchy over depreciating rupee and global economic uncertainty, according to analysts.

Where are markets headed?

Technically, the Nifty successfully cleared the short term resistance of 19650 and post breakout it intensified the positive momentum, according to Shrikant Chouhan, Head of Research (Retail), Kotak Securities.

Higher bottom formation on intraday charts and bullish candle on daily charts supports further uptrend from the current levels, he added.

“The bulls were able to push Nifty higher following a range-bound trading period in the preceding few days. The sentiment remains positive as long as the index sustains above 19,550. On the higher end, gains may extend to the range of 19,900 to 20,000 in the near term, provided that bullishness in the market continues to increase,” said Rupak De, Senior Technical Analyst at LKP Securities.

Updated: 07 Sep 2023, 07:57 PM IST