Sensex and Nifty Extend Decline Amid FPI Outflows and Weak Earnings
Sensex and Nifty continued to decline as FPI outflows and weak Q2 earnings weighed on investor sentiment. Sensex dropped below 80,000, while Nifty opened 0.38% lower. Experts advise caution, especially in mid and small-cap stocks, with more market volatility expected.
Sensex and Nifty Updates
Domestic benchmark indices, Sensex and Nifty, continued their downward trend on Wednesday, with the Sensex slipping below the 80,000 mark for the first time in over two months and the Nifty 50 opening 0.38% lower.
Opening Levels of Sensex and Nifty
The BSE’s 30-share Sensex opened at 79,921.13, down 299.59 points (0.37%) from the previous close of 80,220.72, marking its first dip below 80,000 since August 16. Meanwhile, the broader Nifty 50 dropped 93.95 points (0.38%) to open at 24,378.15. Both indices saw volatility in early trading.
Investor Sentiment and Market Concerns
The market downturn is primarily driven by sustained Foreign Portfolio Investor (FPI) outflows and weaker-than-expected quarterly earnings for Q2 of the current fiscal year.
“The outperformance of large caps over mid and small caps is expected to continue,” noted V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, adding that large-cap financials, especially banking stocks like HDFC, ICICI, Axis, and Kotak, remain strong due to relatively fair valuations.
Indian equities, previously seen as overvalued, are undergoing corrections, said Amit Pabari, Managing Director at CR Forex, as FII outflows push prices to more realistic levels.
FPI Withdrawals
In October, up to October 22, FPIs pulled out ₹72,136 crore ($8.593 billion) from the domestic market, according to data from the National Securities Depository Ltd (NSDL). On Tuesday alone, FPIs sold ₹3,978.61 crore worth of local shares, while Domestic Institutional Investors (DIIs) bought ₹5,869.06 crore of equities, per BSE provisional data.
Stocks in Decline
Major NSE stocks that faced declines include NTPC (down 2.29%), Power Grid Corporation of India (1.64%), Mahindra & Mahindra (1.38%), Eicher Motors (1.31%), and ONGC (1.09%).
Investor Strategy
Experts advise investors to avoid rushing into beaten-down mid and small-cap stocks as more downside may be ahead. They suggest that market focus will soon shift to the outcome of the U.S. presidential election and its potential market impact, signalling more volatility.
