Investors Shift Towards Multi-Asset Strategy Amid Volatile Indian Stock Markets
Indian stock markets experienced a turbulent week as investors adopted a multi-asset strategy to navigate geo-political uncertainties, including Donald Trump’s anticipated return as the 47th US President.
New Delhi: Indian stock markets experienced a turbulent week as investors adopted a multi-asset strategy to navigate geo-political uncertainties, including Donald Trump’s anticipated return as the 47th US President.
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Domestic Indices End Week on a Negative Note
The domestic benchmark indices ended the week with a bearish outlook, as sell-on-rally sentiment dominated the market. Factors such as a strong US dollar and high valuations added to the market pressures.
Also Read: Indian Stock Market Declines as Investors Remain Cautious Amid Mixed Global Cues
- Nifty Index: Closed at 24,005, marking a negative end to the week.
- Sensex: Dropped by 720.60 points or 0.90%, ending at 79,223.11.
- Nifty Bank: Declined by 616.75 points or 1.20%, closing at 50,988.8.
- Nifty Midcap 100: Closed at 57,931.05, down by 177.15 points or 0.30%.
- Nifty Smallcap 100: Declined 46.65 points or 0.24%, ending at 19,033.70.
Market Volatility and Sector Performance
The volatility index (India VIX) eased by 1.43% to 13.54, indicating reduced market turbulence.
- Auto Sector: Outperformed other indices, driven by robust December sales that defied typical demand trends.
- Mid and Small Caps: Showed a mild recovery, outperforming large caps.
- Large Caps: Lagged behind in comparison to mid and small-cap segments.
Expert Recommendations
Market experts advised a buy-on-dips strategy for the Nifty, provided it holds above 23,900. “This strategy aligns with short-term resilience despite persistent volatility,” said Hrishikesh Yedve of Asit C Mehta Investment Intermediates Ltd.
Key Drivers Impacting the Market
- Foreign and Domestic Investor Activity:
- Foreign Institutional Investors (FIIs): Continued outflows weighed on market sentiment.
- Domestic Institutional Investors (DIIs): Maintained an optimistic stance, counterbalancing the FII impact.
- Earnings and Economic Data:
- Investors remain cautious ahead of potential earnings growth for Q3.
- Key economic indicators like FOMC minutes, US non-farm payrolls, and unemployment rates are expected to influence market sentiment.
- Trump’s Economic Policies:
- Uncertainty surrounding Donald Trump’s anticipated policies is adding pressure, particularly in emerging markets.
Outlook for the Upcoming Weeks
Looking ahead, investor focus will shift to Q3 corporate earnings, where an improvement is expected on a QoQ basis. Additionally, pre-budget expectations are likely to drive portfolio realignments.
Vinod Nair, Head of Research at Geojit Financial Services, noted, “Investors should closely monitor upcoming economic data and align strategies accordingly, as these factors could significantly shape market trends in the short term.”
Key Highlights:
- Nifty ends week at 24,005; Sensex falls to 79,223.11.
- Volatility eases; auto sector outperforms others.
- FIIs remain bearish; DIIs maintain optimistic stance.
- Q3 earnings and global economic data to shape market sentiment.
