Nifty will likely open moderately negative on Monday, indicating derivate trading at Gift City. Nifty futures in Gift Nifty is ruling 19,100 against Friday’s Nifty futures closing of 19,131.35. Asian stocks are ruling weak, as there is no respite from the US markets, which continue to reel under selling pressure.

Triggering concern over the rural economy, the Ministry of Agriculture and Farmers Welfares came out with the first advance estimates of the agricultural production that projected the output in almost all kharif crops, barring tur (pigeon pea) is lower.

The second half of the current fiscal may be a different ball game altogether. “With no base factor advantage, the economy will have to be driven by the strength of consumption demand and the acceleration in investments, both public and private. The key concern on growth at this stage emanates from the downside risks to agricultural output induced by an irregular monsoon and the uncertain impact of the prevailing El Nino”, said Suman Chowdhury, Chief Economist and Head – Research, Acuité Ratings & Research,

Analysts expect the market to witness higher selling from foreign portfolio investors, which will keep the market under pressure. As most companies declare quarterly results, FPI flow will decide market movement.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “FPI selling continues unabated. From October through 27th, FPIs have sold equity for Rs 20356 crores. The selling through exchanges has been higher at Rs 25575 crores. (NSDL data)

FPIs were sellers in sectors like financials, power, FMCG and IT.

The primary reason for the sustained selling is the sharp spike in US bond yields, which took the 10-year yield to a 17-year high of 5%. The yield has now declined to 4.84%. With such high bond yields, it is rational for FPIs to take out some money. The Israel-Hamas conflict in West Asia and the uncertainty surrounding the conflict have added to negative sentiments in the market. 

Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd, said: ““FII flows are likely to stay volatile in emerging markets, including India, due to weak global factors. Renewed uptick in US bond yields has led to risk-off sentiment amongst the investors who are deploying funds in safe haven assets. The west Asia conflict and a mixed Q2 earnings so far has made investors jittery about the near term prospects of domestic markets, leading to sell offs. Once the valuations start becoming attractive and volatility reduces, foreign inflows could make a comeback.” 

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