According to the NSE data, FIIs have bought cumulatively ₹7,580.65 crore of Indian stocks, while they were sold ₹8,077.86 crore — resulting in an outflow of ₹497.21 crore on Tuesday. Meanwhile, DIIs infused ₹8,596.01 crore and unloaded ₹7,895.73 crores, recording an inflow of ₹700.28 crores.
FIIs have sold Indian stocks 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 subsequently weighed on market sentiment.
However, the decision by the Federal Reserve of the United States to hold encouraged the bulls to make a strong comeback in the mother market the United States with the S&P rising 1.9 percent yesterday, according to market analysts. Due to the dovish comment from the US Fed, US 10-year bonds and crude oil prices fell.
Selling sequence soon to reverse, FII may turn buyers: Analysts
Analysts believe that the Indian market continues to show resilience even amid several challenges and there is growing concern among foreign investors that if they continue to sell, they will miss out on the potential rally in the Indian market. This could restrain the FIIs from selling heavily in the coming days.
Stable crude, stable dollar, downward trend of 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, however they have still remained net sellers so far in November.
Experts project short FII coverage in the near term as they turn buyers to positive global cues. With Brent crude crashing below the $85 per barrel mark and the Fed’s rate cut, foreign investors may start buying Indian equities soon, analysts said. This could lead to short covering, which may push 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 signals due to a more than expected fall in Chinese exports, highlighting a continued slowdown in global trade,” Vinod said. 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 amid geopolitical tension. This, along with the moderation in US bond yields and the positive ongoing earnings season, will support long-term returns,” Nair added.
Nifty 50 closed at 19,406.70, down 5 points, or 0.03 percent, while Sensex settled at 64,942.40, down 16 points, or 0.03 percent. Medium and small caps recorded decent gains, outperforming the benchmark rates. The BSE Midcap index ended with a gain of 0.53 percent and the Smallcap index rose 0.38 percent.
According to analysts, investors should appreciate the fact that the accumulation in small and medium caps is mainly driven by retail buying in every dip.
”The explosive growth in demat accounts, which have now touched 132 million, is playing a major role in the rally in the broader market while the large caps are under pressure from FII selling,” said Dr VK Vijayakumar of Geojits.
”But large caps especially ICICI Bank, HDFC Bank, RIL, Tata Motors, Bajaj Auto, L&T and Bajaj Finance have fundamental strength boosted by the Q2 results. FIIs turning buyers in India is only a matter of time. When that happens, large caps will outperform the broader market,” he added.
Where are the markets headed?
Market showed resilience at lower levels, despite subdued global environment. ”We expect market to move up gradually due to strong Indian economy and healthy earnings season,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services. Investors are now awaiting comments from US Fed Chairman Powell, which is scheduled for Thursday, on future direction.
Technically, the confirmation of strength for Nifty can be seen only above its biggest obstacles 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 equity specific opportunities. Traders should align their positions accordingly, with a focus on sectors that trade in sync with the benchmark.