On Thursday, October 26, Foreign Institutional Investors (FIIs) extended their selling spree in the Indian stock market, marking the sixth consecutive session of losses. In contrast, Domestic Institutional Investors (DIIs) emerged as net buyers, infusing ₹6,558 crore into Indian equities. The data for the NSE (National Stock Exchange) revealed that FIIs cumulatively purchased ₹10,239.05 crore worth of Indian equities but sold ₹17,941.58 crore, resulting in a net outflow of ₹7,702.53 crore on Thursday. Meanwhile, DIIs injected ₹13,600.71 crore and offloaded ₹7,042.26 crore, resulting in a net inflow of ₹6,558.45 crore.
The ongoing trend of FIIs selling Indian equities is attributed to several factors, including rising US bond yields and the strength of the US dollar index. These global factors have contributed to the bearish sentiment in the market.
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, explained that against the backdrop of weak global cues, investors opted to divest from Indian equities on the monthly Futures and Options (F&O) expiry day. This resulted in the benchmark Nifty closing below the 19,000 mark, with a sell-off observed in frontline banking, automobile, and IT stocks. Chouhan noted that investor concerns are related to ongoing geopolitical tensions in West Asia, economic uncertainties, and apprehensions about interest rate hikes, which have collectively led to a bearish stance being maintained for six consecutive sessions.
In terms of market performance on Thursday, the Nifty 50 closed with a substantial loss of 265 points, or 1.39%, at 18,857.25, while the Sensex concluded at 63,148.15, down by 901 points, or 1.41%. Mid-cap and small-cap stocks also experienced losses, though to a lesser extent. The BSE Midcap index declined by 1.06%, while the Smallcap index saw a 0.32% decrease.
During the six-day losing streak, both the Nifty 50 and Sensex recorded declines of about 5% each. Additionally, the combined market capitalization of companies listed on the BSE decreased from nearly ₹323.8 lakh crore to approximately ₹306 lakh crore.
Vinod Nair, Head of Research at Geojit Financial Services, observed that Q2 results in the Indian market have fallen short of expectations, causing disappointments similar to those experienced in developed economies. He emphasized that the risks associated with a potential economic slowdown due to geopolitical factors and elevated interest rates are leading to a downgrade in earnings and valuations. Moreover, the influence of expiry-led volatility is intensifying selling pressure and prompting investors to exercise caution.
As market dynamics continue to evolve, investors are closely monitoring global and domestic developments that could impact market sentiment and performance.