FIIs selling, macro-data dampen indices; Sensex down over 500 pts

New Delhi: The Indian equity indices — S&P BSE Sensex and NSE Nifty50 — settled lower on Monday on the back of continued selling by FIIs along with investors’ anxiety triggered before the release of retail inflation data.

Notably, on last Friday, the FIIs sold stocks worth Rs 2,743.44 crore on the BSE, the NSE and the MSEI in the capital market segment.

Initially, the equity market opened on a strong note on the back of positive global cues. However, selling pressure emerged in the second half of the trade session.

Globally, Asian stock markets traded mostly higher following broadly positive cues from the Wall Street on Friday, on a spike in commodity prices and easing worries about the coronavirus Omicron variant’s impact on global economic growth.

Similarly, European shares rose lifted by economically sensitive sectors ahead of a wave of central bank policy decisions that could potentially include an early end to US stimulus.

On the domestic front, realty, oil & gas, telecom and FMCG indices lost the most whereas consumer durables index barely managed to end in the green. Consequently, the S&P BSE Sensex closed at 58,283.42 points, down 0.86 per cent from its previous close.

The broader 50-scrip Nifty at the National Stock Exchange (NSE) ended the day’s trade at 17,368.25 points, down 0.82 per cent. “The fact that the Nifty could not benefit from the positive sentiments elsewhere is worrying,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

“Ahead of a series of central bank meetings this week and the approaching calendar year end, FPIs seem to be taking profits and reducing their positions, 17,534 could now be the resistance while 17,252 could be the support.”

According to Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services: “Investors become cautious ahead of various central bank meeting across the world including that of Bank of England, US Fed, ECB and Bank of Japan given the backdrop of inflation and Omicron virus.”

“Markets are consolidating on expected lines. Investors will keep an eye on various central bank meetings and take cues for fresh market direction. After the fall and recovery in the last two weeks, the market is unable to hold back at higher levels, indicating that index may remain sideways in a consolidative mode for some more time.”

In addition, Vinod Nair, Head of Research at Geojit Financial Services, said: “Ahead of the release of domestic inflation data and key global central bank meetings, the benchmark indices dived into the negative zone digesting weak macroeconomic numbers and continued FII selling.”

“India’s Index of Industrial Production grew by 3.2 per cent in October which was lower than market expectations. US CPI inflation was reported above the expected lines at 6.8 per cent YoY in November owing to rising prices for food, energy and shelter. In view of rising global inflation, the policy outcome of key central bank meetings especially the US Fed and European Central Bank, will be keenly monitored by the markets to determine its trends.”