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Nifty, Sensex Slide for 2nd Week Amid FII Outflows and Global Woes

Indian stock markets continued their decline for the second straight week. Foreign institutional investors kept pulling money out despite signs of a strengthening domestic economy. The drop was also fueled by fading hopes for US Federal Reserve rate cuts and weakness in global markets. Next week's direction will hinge on domestic inflation data and ongoing foreign fund flows.

Key Points: Nifty Sensex Decline Continues on FII Selling Global Cues

  • Nifty and Sensex fell 0.71% and 1.65% respectively amid persistent FII selling
  • Fading Fed rate cut hopes and weak IT, metal sectors hurt sentiment
  • Analysts suggest a buy-on-dips strategy as most Nifty 50 earnings meet estimates
  • Stretched valuations make Indian markets among the world's most expensive
2 min read

Nifty, Sensex continue to decline for 2nd week amid FII outflows, weak global cues

Indian stock benchmarks fell for the second week due to foreign investor outflows and weak global trends, despite positive domestic economic signals.

"Select sectors found support from upbeat Q2 earnings, with PSU banks remaining in focus... - Vinod Nair, Geojit Investments"

Mumbai, Nov 8

Indian equity benchmarks continued their decline for the second week, due to ongoing selling by the foreign institutional investors (FIIs) despite indications of a strengthening domestic economy.

Benchmark indices Nifty and Sensex dipped 0.71 and 1.65 per cent during the week to close at 25,492 and 83,216, respectively.

Fading expectations of a Fed rate cut also contributed to cautious investor sentiment amid mixed global cues and sectoral weakness in IT and metals led to the decline

"Select sectors found support from upbeat Q2 earnings, with PSU banks remaining in focus due to robust financial performance, improving asset quality, and renewed speculation regarding a potential FDI cap hike and sector consolidation," said Vinod Nair, Head of Research, Geojit Investments Limited.

Analysts said that buy-on-dips strategy appears prudent, as results from most Nifty 50 companies reported so far have been largely in line with estimates, and continued policy support is expected to support current premium valuations and potentially drive earnings upgrades.

According to analysts, a sharp decline in earnings growth in FY25 to 5 per cent stretched the valuations making Indian market one of the most expensive in the world.

With other emerging markets and some developed markets turning attractive with low valuations, FIIs sold in India and moved money to other cheaper markets, he added.

Nifty is currently trading above 20 times FY27 estimated earnings, which is slightly above last 10-year average PE ratio. Analysts said that due to India’s superior long-term growth potential, the present valuations can be justified even though the broader market valuations continue to be stretched.

Support for the Nifty is currently located close to the 25,400 zone, while resistance is seen around 25,600, they added.

Meanwhile, there are signs of robust economic growth and earnings recovery in India. When leading indicators reinforce this trend, FIIs will reduce selling and eventually turn buyers.

Next week, market direction will depend on upcoming domestic inflation data, FII flows, developments related to the US government shutdown, and progress in trade negotiations involving the US, India, and China.

- IANS

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Reader Comments

P
Priya S
The PSU banks performing well is the only silver lining here. Maybe it's time to focus on domestic sectors rather than worrying about FII flows. Indian economy fundamentals are strong! 💪
A
Arjun K
Buy on dips strategy makes sense, but only for long-term investors. The valuations are stretched, but India's growth story remains intact. This might be a good accumulation opportunity for SIP investors.
S
Sarah B
As someone who tracks global markets, I must say Indian markets have been overvalued for some time. FIIs are just being rational by moving to cheaper markets. We need to accept that premium valuations come with risks.
V
Vikram M
The IT sector weakness is concerning since it's one of our biggest export earners. Hope the upcoming US-India trade negotiations bring some positive news for our tech companies. 🤞
K
Kavya N
This volatility shows why we need stronger domestic institutional participation. DIIs should step up their game to counter FII selling. After all, we Indians should have more faith in our own markets!

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