Inflation fears, rising rates and global recovery to lead to outflows: Experts.
The Indian stock markets could continue their southbound journey, at least for some more time, according to market players. Foreign institutional investors (FIIs), the primary driver of the markets, may continue to sell, they say.
“As the global economy recovers, we have seen a lot of foreign investors reducing their exposure to India and shifting to more export-driven countries,” said Nick Paulson-Ellis, India head at Espirito Santo, a Portuguese financial services firm.
| HIGHLY VOLATILE | ||
| 28-Jan | % Chg* | |
| GAINERS | ||
| ONGC | 1,135.60 | 1.89 |
| Reliance Infra | 724.40 | 1.13 |
| HUL | 272.45 | 0.54 |
| Bharti Airtel | 327.10 | 0.45 |
| HDFC Bank | 2,058.35 | 0.30 |
| LOSERS | ||
| DLF | 223.10 | -7.02 |
| Mah & Mah | 696.85 | -4.93 |
| Hindalco | 223.30 | -4.27 |
| Tata Motors | 1,145.70 | -4.07 |
| BHEL | 2,153.25 | -3.91 |
“In the short term, the Indian market is facing multiple fundamental headwinds like inflation, rising interest rates, current account deficit and corruption scandals. The sectors most over-owned by FIIs, notably financials, are exposed to selloff,” said Paulson-Ellis.
“A bear market is confirmed. The Nifty could go below 5,000,” Mohoni, director at trendwatchindia.com said.
The Sensex fell to its lowest level in nearly five months today as investors dumped stocks on concern that higher interest rates would hurt demand for property, consumer durables and automobiles.
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The trading was also quite volatile. The 30-stock index, which opened at 18,708.62, closed at 18,395.97, down 1.54 per cent, or 288.46 points. It fell as low as 18,235.45 during the day but recouped some losses on short-covering. The Sensex has shed more than 10 per cent in this month so far.
On the National Stock Exchange (NSE), the 50-stock Nifty ended below 5,600 level. The index lost 92.15 points, or 1.64 per cent, to close at 5,512.15. The index closed below its 200-day moving average of 5,621, an important technical level, for the second straight day. It was the lowest close for the Sensex and the Nifty since September 3, 2010.
The outlook for the stock market will continue to be weak as FIIs have gone underweight on Indian shares. Lack of support from domestic players, such as, mutual funds and insurance companies, is also hurting the market mood.
“FIIs are selling and there is lack of support from domestic investors,” said Motilal Oswal, chairman and managing director of Motilal Oswal Financial Services.
FIIs have net-sold Indian shares worth $924 million (Rs 4,221 crore) this month. This will be the first time since May 2010 that FIIs are going to be net sellers of Indian shares in a particular month. BSE data show FIIs sold shares worth Rs 706.8 crore today while domestic investors bought shares worth Rs 81.2 crore.
Among the major losers in the Sensex, DLF lost seven per cent at Rs 223.10, M&M declined 4.9 per cent to Rs 696.85, Hindalco fell 4.3 per cent to Rs 223.30 and Tata Motors shed 4.1 per cent to Rs 1,145.70.
Among the major sectoral indices on BSE, realty was down 4.96 per cent, consumer durables 3.9 per cent, auto 3.6 per cent and capital goods 3.1 per cent.