Nifty, Sensex end lower this week over below-normal monsoon forecast, FII selling
Mumbai, May 30
The Indian equity benchmarks posted notable losses during the week due to sustained FII selling and below-normal monsoon forecast, causing fears of food inflation.
Nifty lost 0.72 per cent during the week and dipped 1.50 per cent on the last trading day to reach 23,547. At close, Sensex was down 1,092 points or 1.44 percent at 74,775. It declined 0.85 per cent during the week.
Large caps remained under pressure even as the broader market demonstrated meaningful resilience as midcaps briefly touched its all-time high.
"PSU Banks led on mark-to-market treasury gains from yield compression while autos and metals benefited from crude's sharp decline. FMCG, healthcare, and consumer durables declined as defensive premiums unwound on improving risk appetite," an analyst said.
MSCI index rebalancing-related adjustments also triggered substantial institutional selling in the last trading session.
Overall, the macro backdrop is more constructive than it was a fortnight ago, but confirmation through policy clarity, monsoon normalisation, and geopolitical de-escalation is needed before large cap conviction builds into the next meaningful leg higher, market participants said.
Crude oil staged a sharp weekly decline driven by optimism around a potential US-Iran diplomatic breakthrough but IMD's below-normal monsoon forecast offset resultant gains.
The rupee firmed modestly through the week after RBI's commentary signalling that the INR remains undervalued.
Cumulative outflows by foreign institutional investors (FIIs) stood at approximately Rs 23,700 crore during the week, they said.
Broad market indices showed divergence with benchmark indices, as Nifty Midcap100 added 0.54 per cent, while Nifty Smallcap100 gained 1.02 per cent during the week.
Nifty 50 is expected to see the 24,000-24,100 region as a strong resistance zone and the 23,300-23,000 region remains a crucial support area, market participants said.
In Bank Nifty, immediate resistance is placed around the 54,600-54,800 zone and the 54,200-54,000 region continues to act as an immediate support zone.
Investors remain keen on cues from the upcoming RBI monetary policy decision, India's GDP data release, Purchasing Managers' Index (PMI) and the Index of Industrial Production (IIP) data.
— IANS
Reader Comments
Why is everyone panicking? Midcaps and small caps are doing well. It's the large caps that are being hammered by FIIs. If you're a long-term investor, this is a buying opportunity. Nifty at 23,500 is still high from where we were a year ago.
Interesting divergence—large caps down but midcaps and small caps holding up. Typical of a market where FIIs are rotating out of liquid names while domestic money chases momentum. Still, US-Iran news on crude is a positive. Let's see if that holds.
Rahul bhai, this is exactly why we need to watch the RBI policy next week. If they cut rates, it could boost sentiment. But with monsoon concerns and FII outflows, I'm cautious. Better to hold cash and wait for clarity.
The analyst says "constructive macro backdrop," but 23,700 cr FII selling in a week? That's scary. Even if midcaps are resilient, the broader trend is clear. I'm staying defensive—sticking with FMCG and pharma for now.
Honestly, the market is overreacting to monsoon news. IMD's forecast is just an initial estimate—we've seen it revised later. But the real issue is FIIs selling everything India. Maybe they're chasing China reopening? Either way, domestic investors should stay calm.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.