Foreign institutional investors (FIIs) continued their selling streak even as Sensex and Nifty settled higher tracking positive global cues on Friday, September 29. The domestic institutional investors (DIIs) are net buyers again and invested ₹2,751.49 crore in Indian stocks today.
FIIs have sold ₹25,000 crore in cash markets this month, according to analysts. The US Treasury yields hit a 16-year high mark and crude oil prices almost touched $98 per barrel this week amid concerns over interest rates staying high for an extended period and its impact on the global economy. This has largely supported the FII selling streak since August.
As per the NSE data, FIIs cumulatively bought ₹10,058.35 crore of Indian equities, while they sold ₹11,744.05 crore — resulting in an outflow of ₹1,685.70 crore on Friday. Meanwhile, DIIs infused ₹8,788.50 crore and offloaded ₹6,037.01 crore, registering an inflow of ₹2,751.49 crore.
‘’Sustained FII selling may continue to weigh on markets. FII selling of ₹25,000 crores this month has pulled down the banking stocks making their valuations attractive. The Q2 results of the banking segment will be good and the market can respond positively to this. This is a safe bet now,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Stock Market Today
Analysts reckon that persistent selling by foreign investors and global cues such as rising US bond yields and crude oil prices presents a bleak picture for markets in the near-term. The benchmark Nifty 50 has retreated from its record-high level achieved earlier this month on unfavorable global triggers.
Frontline indices Sensex and Nifty ended with decent gains on Friday, tracking positive global cues, as investors shifted focus to the Reserve Bank of India’s monetary policy outcome next week and the upcoming quarterly earnings.
The domestic market witnessed volatility in September as concerns over higher interest rates, foreign capital outflow and global economic slowdown weighed on sentiment. However, the Nifty 50 ended the month with a gain of 2 per cent while the Sensex rose 1.5 per cent. The BSE Smallcap index also rose about a per cent. The BSE Midcap index, on the other hand, jumped 3.7 per cent in September.
Nifty 50 closed the day at 19,638.30, up 115 points, or 0.59 per cent while the Sensex closed at 65,828.41, up 320 points, or 0.49 per cent. The BSE Midcap index jumped 1.31 per cent while the BSE Smallcap index rose 0.57 per cent.
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Will FIIs’ selling streak continue in October?
Analysts expect the market to trade in a broader range as the higher oil price has rekindled the worry over inflation and might result in a prolonged high interest rate environment.
‘The market is facing stiff resistance at higher levels due to insipid liquidity and a lack of triggers to overcome the bears. The upside risk to domestic inflation may recede with the return of a good monsoon in September,’’ said Vinod Nair, Head of Research at Geojit Financial Services.
Though the pace of decline in markets has softened, the tone is still negative and analysts don’t see that change until Nifty decisively reclaims 19750. Meanwhile, a mixed trend on the sectoral front is offering opportunities on both sides so traders should continue with stock-specific trading approach. Stepping into the new month, some analysts also expect market dynamics to change in October on historical trends.
“The ‘sell on rally’ market construct is likely to change in October. October is usually a favourable month, both for US and Indian markets. There are indications that this historical trend may play out this October too,” said Geojits’ Dr. V K Vijayakumar.
‘’The ‘triple whammy’ of up-trending dollar, US bond yields and Brent crude is showing signs of easing. If this trend continues it will facilitate a recovery in markets. Stability in the US market yesterday also can be a supportive factor,” he added.
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