Domestic benchmark equity indices Sensex and Nifty continued their fall on Wednesday, with the Sensex sliding below 80,000 mark for the first time in over two months and the Nifty 50 declining 0.38 per cent at the opening.
At what levels have Sensex and Nifty opened?
The BSE’s 30-share Sensex opened at 79,921.13, down 299.59 points, or 0.37 per cent, compared to the previous close of 80,220.72. This the first time since August 16, that the index has opened below the 80,000-level.
The broader Nifty declined 93.95 points, or 0.38 per cent, to open at 24,378.15.
However, both the indices kept fluctuating in the early morning trades.
What is weighing on the sentiments of investors?
The sell-off in the market is mainly due to the sustained outflows from the foreign portfolio investors (FPIs) and weak quarterly earnings during the second quarter of the current fiscal.
“The ongoing trend of largecaps outperforming mid and smallcaps is likely to sustain, going forward. FII selling and the countervailing trend of DII buying is likely to continue,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
The trend, he said, will impart strength to largecap financials, particularly banking stocks like HDFC, ICICI, Axis and Kotak which are fairly valued in this market with elevated valuations
“Indian equities, long considered overvalued, are undergoing sharp corrections, returning to more realistic levels. This is also fueled by persistent Foreign Institutional Investor (FII) outflows throughout the month,” said Amit Pabari, Managing Director, CR Forex.
How much have FPIs pulled out from the domestic market?
So far in October (till October 22), FPIs have offloaded Rs 72,136 crore, or $8.593 billion worth of domestic shares, the National Securities Depository Ltd (NSDL) data showed.
On Tuesday, foreign investors sold Rs 3,978.61 crore worth of local shares, according to the BSE’s provisional data. Domestic Institutional Investors (DIIs), however, bought Rs 5,869.06 crore of equities on Tuesday, the data showed.
Which stocks have declined?
Among the NSE companies, the ones that fell included NTPC (2.29 per cent), Power Grid Corporation of India (1.64 per cent), Mahindra & Mahindra (1.38 per cent), Eicher Motors (1.31 per cent) and ONGC (1.09 per cent).
What should investors do?
According to Geojit’s Vijayakumar, investors should not rush to buy the beaten down mid and smallcaps since there is more pain left in this segment where valuations continue to remain very high. There can be individual cases of sharp rebounds in this segment. “In the coming days the market will be looking forward to the outcome of the US presidential elections and its possible impact on the market,” he said, incidcating at more churn.
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