Markets under pressure; HDFC Bank, Reliance, Shriram Finance down

Indian equity markets are feeling the strain as Foreign Institutional Investors (FIIs) continue to sell off their positions. Analysts suggest that this selling spree is driven by FIIs looking to wrap up their positions before the year ends, opting not to hold these positions even in the cash markets.

The Nifty 50 index fell by 300 points, or 1.2%, to 24,323.60 from the day’s high, while the Sensex dropped 973.67 points, or 1.2%, hitting a low of 80,639.97.

Ajit Mishra, Senior Vice President of Research at Religare Broking, attributed the downturn primarily to year-end FII selling, particularly affecting large-cap stocks. He also noted that some stocks experienced a sharp recovery due to Domestic Institutional Investors (DIIs) stepping in to buy. Additionally, FIIs are reportedly cashing in on good returns in the US markets, with expectations of a policy rate cut potentially boosting US market performance.

Profit-taking in select IT stocks ahead of the Federal Reserve's policy announcement also contributed to the market decline.

The broader Nifty Midcap 100 index showed some early strength but eventually traded 450 points lower, down 0.8% at 59,204.30. The Nifty Bank index also fell, dropping 780 points from its peak to trade at 52,735.95.

Key contributors to the Nifty 50's decline included heavyweight stocks such as HDFC Bank, Reliance Industries, Bharti Airtel, ICICI Bank, and TCS. Significant losers in the Nifty 50 were Shriram Finance, which lost up to 4.8%, along with Bharti Airtel, Grasim Industries, JSW Steel, and Hero MotoCorp.

Rupak De, Senior Technical Analyst at LKP Securities, noted that the Nifty's sharp decline followed the formation of a bullish harami pattern on the daily timeframe yesterday.