Foreign Portfolio Investors Continue Selloff, Markets Decline

In October, foreign portfolio investors (FPIs) have been on a significant selling spree, with their total offloading of shares amounting to $10.61 billion so far, according to data from NSDL. On Wednesday alone, FPIs sold shares worth ₹5,684 crore, adding to the month’s decline.

Nifty and Sensex Decline

The Indian stock markets have not been immune to this trend. The Nifty 50 index has dropped by 5.8% this month, while the Sensex has seen a decrease of 5.7%. On Wednesday, the Nifty 50 fell by 0.15%, closing at 24,436, and the Sensex decreased by 0.16%, ending the day at 80,090. Despite a brief recovery during the trading session, a majority of Nifty stocks were in the red, with 32 out of 50 ending negatively.

Market Dynamics

While the broader markets performed slightly better, with Midcap and Smallcap indices rising by 0.7% and 1.3% respectively, the sectoral performance was mixed. The IT Index saw a gain of 2.4% after several mid-cap companies like Persistent Systems and Coforge reported strong second-quarter earnings, yet the pharma and healthcare sectors each dropped by over 1%.

Sentiment and Outlook

Market sentiment has been negatively affected by high valuations, disappointing Q2 earnings reports, ongoing geopolitical tensions in West Asia, and uncertainty related to the US elections. Analysts have pointed out that companies that failed to meet earnings expectations have seen their stock prices decrease, while those that performed above expectations have achieved record highs.

Additionally, the IMF maintained its growth forecasts for India at 7% for FY25 and 6.5% for FY26, which provides some positive news for the market.

Global Influences

Globally, markets remain under pressure due to a strengthening dollar, lower growth forecasts from the IMF, the uncertain political climate in the US, and rising geopolitical tensions. There is also speculation surrounding the US Federal Reserve's potential actions regarding interest rates.

Technical Analysis

Technical analysts suggest that the Nifty index could face crucial short-term support around the level of 24,378. A drop below 24,370 may bring the index down toward 24,200-24,000. Recent chart patterns indicate a potential for strength, yet analysts recommend that traders consider profit-taking during any upward movements while remaining cautious due to the prevailing weaknesses.

Investors, Markets, Decline