FPIs Sell Over $10 Billion in October as Nifty and Sensex Decline

In October 2024, foreign portfolio investors (FPIs) are actively selling off shares, contributing to a significant dip in key Indian stock indices. On Wednesday, FPIs sold off shares worth ₹5,684 crore, leading to a cumulative selloff surpassing $10.61 billion for the month, as reported by NSDL.

Market Performance Overview

The Indian stock markets faced pressure due to investor sentiment, with the Nifty 50 index declining by 5.8 percent and the Sensex falling by 5.7 percent this month. After a brief spike in IT stocks, the markets experienced a sharp sell-off, particularly in the financial sector, resulting in a close that left both indices in negative territory. Specifically, the Nifty 50 settled down 0.15 percent at 24,436 and the Sensex dropped 0.16 percent to end at 80,090. Even with some minor recoveries, the majority of stocks within the Nifty were unable to maintain their positions, with 32 out of 50 stocks closing lower.

Broader Market Trends

While major indices faced difficulties, broader market indices performed better in comparison. The Midcap and Smallcap indices managed to gain 0.7 percent and 1.3 percent, respectively. Individual sector performance was mixed; while the IT Index soared by 2.4 percent following strong quarterly results from mid-cap firms such as Persistent Systems and Coforge, the pharmaceutical and healthcare sectors faced a downturn, with losses exceeding 1 percent.

Market Sentiment and Influences

Market sentiment has been impacted by a combination of factors including high valuations, underwhelming earnings reports for Q2, geopolitical tensions in West Asia, and uncertainty surrounding the upcoming US elections. Vikram Kasat, the Head of Advisory at PL Capital - Prabhudas Lilladher, noted that companies failing to meet earnings forecasts faced substantial sell-offs, while those surpassing expectations reached new price highs.

Furthermore, the International Monetary Fund (IMF) maintained its growth predictions for India at 7 percent and 6.5 percent for FY25 and FY26, respectively, which could be considered a silver lining amidst the turbulence.

Global Market Context

Global markets are also facing downward pressure due to a strengthening dollar, lowered growth forecasts from the IMF, the ongoing uncertainty regarding the US elections, and rising geopolitical tensions. Additionally, there is speculation about a less aggressive stance from the US Federal Reserve concerning rate cuts, contributing to the volatility.

Technical Analysis Insights

According to analysts, the level of 24,378 is seen as crucial short-term support for the Nifty. If the index breaches 24,370, it could fall further towards the 24,200-24,000 range. Technical indicators also suggest that the Nifty has formed an inverted hammer candle on daily charts following the breakdown of a head and shoulder pattern, which generally signifies strength. With an overall bearish outlook, traders are advised to utilize any market rallies to secure profits.

FPIs, Nifty, Sensex