Even as stock futures kept rising in the US and Europe markets, India’s key benchmark equity indices Sensex and Nifty were reeling under the selling pressure from foreign portfolio investors (FPIs).
In just four trading days of February, FPIs have been net sellers of stocks worth ₹5,228 crore. On Monday, they sold stocks worth ₹1,157 crore in the cash market.
On Monday, the Sensex fell 1,023 points, or 1.75 per cent, to close at 57,621. The Nifty index declined 302 points, or 1.73 per cent, at 17,213. Stock markets in Europe were up 0.5-1 per cent. US stock futures were up marginally when Indian markets were open for trading.
All eyes on RBI
Market players have set their eyes on the outcome of the Reserve Bank of India monetary policy meeting on Thursday, which will set the course on interest rates in India. Market players believe that while the RBI may not be happy about the rising inflation, it may still continue to support economic growth rather than applying the brakes on the easy money policy.
“The Nifty index has a strong support at 16940 and the market fall could be limited to around 1.5 per cent from current levels. However, the risk-reward is favourable in going long on the markets than selling now. We are near the bottom end of the range of the Nifty index and should be heading back to 18,600 levels, which means a rally of 8-10 per cent from the current levels,” said Rohit Srivastava, strategist, Indiacharts.
inflation worries
Rohit is of the view that markets cannot fall sharply from here as there is already too much fear and pessimism among investors and traders and most have been waiting for a major decline to enter the market. In such a scenario, the indices will see buying at low levels and bounce back strongly, analysts say. Inflation due to global crude oil price jump and tensions on the Russia-Ukraine border have scared stock market investors. But since oil is not rising due to demand pressure, it is likely that crude prices will not sustain at higher levels, experts say.
Volatility to persist
Naveen Kulkarni, Chief Investment Officer, Axis Securities, said, “We expect the markets to continue to remain volatile on the back of the recent interest rate movements globally. Most emerging markets will continue to see FPI outflows and currency depreciation in the short term. We believe that this volatility should be bought into by regular investments, as earning expectations for Indian corporates remain strong.”