Record Sell-Off by Foreign Portfolio Investors Hits Indian Markets

In October, the Indian stock markets have witnessed significant declines, with Nifty and Sensex down by 5.8% and 5.7% respectively.

Continued Selling by FPIs

Foreign portfolio investors (FPIs) have continued their selling spree, offloading shares worth ₹5,684 crore on a single day, which brings the total selling figure for October to $10.61 billion, according to data from NSDL.

Market Performance on Wednesday

Despite an initial uptick in IT stocks, the Indian markets closed lower due to a steep sell-off in financial stocks. The Nifty 50 index saw a slight decrease of 0.15%, finishing at 24,436, while the Sensex dropped by 0.16% to close at 80,090. Out of the 50 Nifty stocks, 32 ended the day in the red, signaling a challenging day for the market.

Broader Market Performance

On a brighter note, the broader market indices showed positive movement, with Midcap and Smallcap indices gaining 0.7% and 1.3%, respectively. Among the sectoral performance, the IT Index climbed by 2.4%, bolstered by strong second-quarter results from mid-cap companies such as Persistent Systems and Coforge. However, the pharma and healthcare sectors saw declines of over 1% each.

Market Sentiment and Economic Factors

Market sentiment has been negatively influenced by factors such as high valuations, lackluster second-quarter earnings, geopolitical tensions in West Asia, and uncertainty surrounding the upcoming US elections. Companies that missed earnings expectations faced sharp sell-offs, while those that exceeded forecasts experienced strong gains.

Outlook and Support Levels

The IMF has maintained its growth forecasts for India at 7% for FY25 and 6.5% for FY26, which offers some optimism for the markets. However, global market conditions remain challenging, impacted by a strengthening dollar, declining growth forecasts, and geopolitical uncertainties. Analysts indicate that a crucial level of short-term support for the Nifty is 24,378. Should the index fall below 24,370, it could slide further towards the 24,200-24,000 mark.

Technical Analysis

From a technical perspective, the Nifty has formed an inverted hammer candle pattern, suggesting potential strength after a breakdown of a head and shoulder formation. This pattern typically indicates a chance for recovery. Traders are advised to consider booking profits on any upward movements, given the pervasive market weakness.

Overall, the market landscape appears complex as investors navigate through challenging conditions in both domestic and global contexts.

FPIs, Markets, Sell-Off