The Indian market was reeling under the selling pressure of foreign portfolio investors (FPIs) on Tuesday. Despite no major fall in the US index futures and European markets, the Sensex and Nifty declined 0.6 per cent and 0.65 per cent, respectively, mainly as FPIs sold stocks worth ₹3,086 crore in the cash segment in a single trading session, provisional figures showed.

Derivative data for the day was still awaited but FPI short positions in the index futures segment had risen above 125,000 contracts indicating too much pessimism. Sensex fell 337 points to close at 57,900. The Nifty declined 111 points to 17,043. Banking stocks remained under pressure in line with weak global sentiment against banks after the SVB fiasco in the US.

Eye on global markets

Moves in the US stock market will decide the mood for Indian markets on Wednesday. Post market close here, main indices in the Europe were all trading more than 1 percent higher from the previous days close. Also, US’ Dow futures were trading higher by 300 points or nearly 1 per cent while the S&P 500 and Nasdaq futures were higher by 1.5 per cent to 1.8 per cent.

If the US markets close higher on Tuesday, Indian markets will witness a big short covering rally as FPIs will rush to unwind their bearish bets, analysts said. According to market experts, for the next few weeks India’s markets will only move on cues from the US markets and commentary from the US Federal Reserve.

Countering FPI selling

Mutual funds are the counter force to FPI selling domestically. On Tuesday, FPIs net purchased stocks worth ₹2,122 crore in the cash segment. Mutual funds are witnessing strong retail investor inflows. For February, the systematic investment plan (SIP) inflow for domestic mutual funds stood at ₹15,000 crore. Analysts said it simply meant that Indian investors were putting to practice the theory of invest when the sentiments are negative, to proper test and hence the SIP inflows remained strong.

Related Topics
comment COMMENT NOW