Mumbai: India’s equity markets began the week on a subdued note, with the Sensex and Nifty witnessing early declines on Monday. Persistent foreign portfolio investor (FPI) selling, underperformance in the IT sector, and weak cues from US markets dampened sentiment.
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Market Performance in Early Trade
- BSE Sensex: Declined by 156.72 points, trading at 77,423.59.
- NSE Nifty: Dropped by 64.25 points, standing at 23,468.45.
Top Losers
Stocks dragging the markets down included major IT players and select banking and automotive stocks:
- Infosys
- Tech Mahindra
- HCL Technologies
- Tata Consultancy Services
- NTPC
- Axis Bank
- Tata Motors
- IndusInd Bank
Top Gainers
Despite the broader market decline, a few stocks managed to gain traction:
- HDFC Bank
- Tata Steel
- Bajaj Finance
- Asian Paints
Foreign Fund Outflows Weigh on Sentiment
Relentless selling by Foreign Institutional Investors (FIIs) has significantly impacted Indian equity markets:
- FIIs offloaded equities worth ₹1,849.87 crore on Thursday.
- Total FPI outflows for November 2024 stand at ₹22,420 crore due to concerns over high domestic stock valuations and increased allocations to other markets like China.
- Cumulative FPI outflows for 2024 have reached ₹15,827 crore, highlighting sustained foreign investor caution.
Expert Analysis: Key Factors Influencing the Decline
Market Correction and Earnings Downgrades
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted:
- The Nifty has corrected by 10.4% from its peak, with no immediate signs of a sustained recovery.
- Factors such as FII selling, earnings downgrades for FY25 across multiple sectors, and global uncertainties continue to weigh on the markets.
Global and Domestic Influences
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, added:
- Weak leads from Wall Street and rising US bond yields have exacerbated market anxiety.
- Concerns over the “Trump trade” and its global repercussions further contribute to the bearish sentiment.
Global Market Overview
Asian Markets
- Positive Movements: Seoul, Shanghai, and Hong Kong traded higher.
- Negative Performance: Tokyo witnessed declines, reflecting mixed sentiment in the region.
US Markets
- Major indices ended lower on Friday, as rising bond yields and cautious investor sentiment persisted.
Commodities
- Brent Crude Oil: Climbed by 0.51%, trading at $71.40 per barrel.
Previous Session Recap
In the last trading session on Thursday, the Sensex and Nifty also ended in the red:
- Sensex: Fell by 110.64 points (0.14%) to settle at 77,580.31.
- Nifty: Declined by 26.35 points (0.11%) to close at 23,532.70.
Markets were closed on Friday due to the Guru Nanak Jayanti holiday.
Outlook for Indian Equity Markets
As the Indian markets navigate volatile global cues and domestic challenges, analysts suggest investors remain cautious:
Short-Term Challenges
- FPI Selling Pressure: Continued foreign fund outflows could limit any immediate recovery.
- IT Sector Weakness: Ongoing challenges in the technology sector are likely to persist, affecting overall market sentiment.
Positive Catalysts
- Global Oil Prices: The recent stabilization of Brent crude prices could provide relief to Indian markets, particularly oil-dependent sectors.
- Supportive Policy Measures: Any intervention from the government or Reserve Bank of India to stabilize markets could improve investor confidence.
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Conclusion
The Sensex and Nifty’s early trade decline reflects a combination of global and domestic pressures, particularly relentless FII outflows and sector-specific challenges. As markets remain under pressure, investors are advised to focus on quality stocks with strong fundamentals and adopt a long-term perspective.
While short-term volatility persists, India’s economic fundamentals and ongoing policy reforms provide a foundation for future market recovery.