Why the Indian market remains stable amidst a global sell-off

K.S. Badri Narayanan Chennai | Updated on October 03, 2019 Published on October 03, 2019

The Indian markets were relatively stable on Thursday. The Asian markets opened sharply lower, following a huge sell-off in the US markets overnight. Share markets in Japan, Korea, Hong Kong, China, Singapore and Australia fell one to two per cent on Thursday due to the trade tension between the US and Europe.

However, the BSE Sensex and the Nifty slid just 0.17 per cent. The BSE MidCap and BSE SmallCap indices also slipped about 0.15 per cent.

Read also: How Indian stock market may benefit from sell-off in US equities

Some of the stocks beaten down by alleged corporate governance issues such as YES Bank, CG Power and Indiabulls Housing Finance, made handsome gains today.

According to experts, the Indian market will not fall further due to various reasons such as the government tax cut, a low interest rate regime, a vibrant monsoon and green shoots seen in FMCG sales on festive demand.

Read more: India, Malaysia priciest share markets in Asia

According to a Mumbai-based analyst working for a domestic brokerage, "Our market has already corrected sharply in August and in early September. It seems the worst is over for now, given the proactive policy-makers."

A stable government is an added advantage for India, when compared with the political tensions across the world, he added. India will remain an attractive destination for FPIs for this reason alone, he said.

Going forward, interest rates are expected to fall further, a Chennai-based analyst said. The tax cut announced by the Government a few weeks back would have boosted most companies' bottomlines by at least 4 per cent Besides, further rate cuts will make Indian equities more attractive, he added.

According to A.K. Narayanan, independent advisor, mutual funds have a strong inflow of Rs 8,000 crore through SIPs (systematic investment plans). This will act as a counter-balance and a stabilising factor against FPI selling.

Besides, MFs are sitting on a huge cash pile, waiting to deploy the funds on every correction. They have already pumped in a portion of their cash to buy 'value' stocks in the recent correction, he added.

Technically, also, as long as the Nifty holds above 10,535, the long-term bullish outlook remains intact, an analyst tracking the charts in Chennai said.

Published on October 03, 2019
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