Indian Markets Extend Losses: FII Selling, Global Cues Impact Sensex & Nifty

Indian benchmark indices, Sensex and Nifty, concluded their third consecutive week with losses, marking the longest such streak in five months. This downturn was primarily influenced by renewed selling from Foreign Institutional Investors (FIIs), ongoing geopolitical tensions, and increasing US bond yields.

Key Market Drivers

• FIIs were net sellers, offloading equities worth Rs 20,260 crore.
• Domestic Institutional Investors (DIIs) provided crucial market support by investing Rs 19,309.93 crore.
• The rupee showed resilience, gaining 32 paise against the US dollar to close at Rs 95.38.
• Other factors included elevated crude oil prices and an unusual surge in mid- and small-cap segments.

Looking ahead, investors are advised to closely monitor first-quarter GDP data and inflation figures. GDP growth for the April-June quarter is projected at a median of 7.3%, supported by robust consumption, exports, and government capital expenditure.

Inflation and Crude Oil Outlook

The inflation outlook is critically dependent on September rainfall, with a potential shortfall possibly pushing FY27 consumer price inflation to 5.5% or higher if El Nino conditions persist. Crude oil prices are expected to remain a key market driver, with developments around the Strait of Hormuz influencing geopolitical risk premiums.

A recent decline in crude prices, coupled with a stronger rupee and softer US yields, had previously offered some protection to Indian equities. Following US Fed Chairman Kevin Warsh’s speech at the Jackson Hole Symposium, the likelihood of a US interest rate hike has significantly increased.

Observers still anticipate the Federal Reserve to maintain current rates in September. The near-term market direction will be shaped by macroeconomic data, global market cues, international crude oil prices, and FII flows.

IPO Market Resurgence

The IPO market is poised for a significant September, potentially becoming the biggest month for public issues. Jio Platforms has received Sebi approval for an IPO expected to raise around Rs 37,700 crore, potentially India’s largest.

NSE is also anticipated to receive Sebi approval soon for its Rs 30,000 crore IPO. In addition to these, over 25 other IPOs are slated for launch, spanning various sectors.

This revival is attributed to better listing performances, steady domestic liquidity, and a substantial backlog of companies awaiting listing, despite a range-bound secondary market. Investors are encouraged to remain selective and stick to sound investment strategies during market fluctuations.

Futures & Options Segment

• Nifty and Bank Nifty experienced modest losses.
• Rollovers for both indices improved, indicating a positive start to the September series.
• Key resistance for Nifty is identified between 24,200-24,300, with support at 24,100-24,000.
• Bank Nifty faces resistance near 57,800.
• IT, Metal, and Pharma sectors were top performers.
• The India VIX concluded at 11.06%, and the Put-Call Ratio Open Interest (PCR OI) stood at 1.12.