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Overnight fall in US based tech stocks hit the stock market sentiments in India on Friday. Sensex and Nifty fell by 1.5 per cent as foreign portfolio investors (FPIs) continued their relentless selling. As 2021 comes to an end, analysts have pinned their hopes on the Union Budget announcement and Uttar Pradesh State elections in February 2022 for the market sentiments to improve. But there seems to be a consensus that the Nifty index was near its short term bottom after Friday's fall.
Sensex fell by 889 points to close at 57,011 and Nifty was down by 263 points at 16,985. Tech laden Nasdaq index in US was down 2.6 per cent on Thursday its opening was equally poor on Friday. This saw markets in China, Hong Kong and Japan decline on Friday. US markets were falling due to quadruple witching, an event where all derivative contracts of different segments expire on the same day causing huge volatility.
FPIs sell-off
Stock exchange data showed that FPIs sold stocks worth ₹2,069 crore in cash segment and ₹470 crore worth index futures on Friday. FPIs offloaded stocks worth ₹26,687 crore in cash segment, ₹4,275 in index futures and ₹3,873 crore in stocks futures in December. During the same period, domestic institutions bought stocks worth ₹20,042 crore.
"We are six to eight weeks away from two big domestic events, the Budget and UP state elections that could potentially set the market direction. After Friday fall, the Nifty index seems near its short term bottom and on the upside the levels for the index could be capped at around 18,600. Corporate earnings for the past year (FY22) were robust due to negative base effect but that will moderate in FY 2023. Markets will see a fresh breath of air once investors start factoring in FY 2024 earnings and that's when Nifty could break the upward range. We are six to eight months away from this," said Rahul Arora, CEO, Institutional Equities, Nirmal Bang.
Analysts say IPOs had upset the secondary market rally as liquidity was being sucked out.
"Between ₹60,000 and ₹80,000 crore has been sucked out from secondary markets to invest in IPOs in the last couple of months. Upcoming IPOs of LIC and NSE, the two largest for India next year, will suck out more liquidity. It is simply not allowing Nifty to break 18,600. Further market crashes will be restricted as domestic funds are countering FPI selling," said Kishor Ostwal, MD, CNI Global Research.
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