Indian Stocks Dip: Geopolitical Fears, FII Outflows Hit Market

Indian equity markets demonstrated lacklustre trade during late afternoon deals, with the BSE Sensex closing down 0.46%. This downturn occurred amidst heightened geopolitical tensions and persistent fund withdrawals by foreign institutional investors.

Hopes for a peace deal between the US and Iran faded after US President Donald Trump ruled out an extension of the ceasefire arrangement. These escalating tensions pushed global crude oil prices above the $91 a barrel mark, raising concerns over inflationary pressures.

Key Market Drivers

• Fading US-Iran peace deal hopes following President Trump’s statement.
• Rising global crude oil prices, exceeding $91 per barrel.
• Continued outflow of funds by Foreign Institutional Investors (FIIs).
• Cautious trading ahead of the weekly Nifty F&O contract expiry.

FIIs were net sellers on Tuesday, offloading securities worth Rs 2,535.10 crore from Indian capital markets. Investors adopted a cautious stance, staying away from risky bets ahead of the Nifty Futures & Options contract expiry later in the day.

Globally, Asian equity markets traded mixed, while European equity markets registered declines. This was attributed to escalating tensions in the Middle-East alongside rising bond yields.

Index Movements

• BSE Sensex current trade: 77371.53
• Points down: 356.63
• Percentage decline: 0.46%
• Trading range: 77275.96 to 77575.21
• Advancing stocks on Sensex: 9
• Declining stocks on Sensex: 21

Sectoral Performance

Among BSE sectoral indices, Auto, Healthcare, and Energy saw gains, while IT and TECK led the declines.

• Top Gaining Sectors:
  • Auto: up by 0.27%
  • Healthcare: up by 0.26%
  • Energy: up by 0.22%
  • Utilities: up by 0.13%
  • Telecom: up by 0.02%
• Top Losing Sectors:
  • IT: down by 1.46%
  • TECK: down by 1.28%
  • Realty: down by 1.02%
  • Consumer Durables: down by 0.83%
  • FMCG: down by 0.59%

Sensex Top Movers

Axis Bank and Mahindra & Mahindra were among the top Sensex gainers, while Asian Paints and HCL Technologies recorded the steepest losses.

• Top Gainers:
  • Axis Bank: up by 1.14%
  • Mahindra & Mahindra: up by 0.82%
  • Power Grid Corporation: up by 0.51%
  • NTPC: up by 0.39%
  • Reliance Industries: up by 0.35%
• Top Losers:
  • Asian Paints: down by 2.45%
  • HCL Technologies: down by 2.39%
  • Infosys: down by 2.02%
  • Tech Mahindra: down by 1.54%
  • TCS: down by 1.40%

RBI’s FCNR(B) Facility Update

The Reserve Bank of India (RBI) closed the window for fresh FCNR(B) deposits under its special swap facility on August 31, one month ahead of its scheduled September 30 date. SBI Research, in its ‘Ecowrap’ report, indicated that the cost of swaps was not likely a constraining factor for this early closure.

Instead, SBI Research suggested the most probable reason was that the target for FCNR(B) mobilisation had already been achieved. The report provided key figures regarding the facility’s performance and future outlook.

• FCNR(B) deposits as of August 13: $52.3 billion
• Total mobilisation (including overseas foreign currency borrowings and external commercial borrowings): $56.8 billion
• Expected FCNR(B) mobilisation: $60-65 billion
• Expected total inflows (including OFCBs and ECBs): $80-85 billion