Benchmark indices opened lower on Thursday as persistent foreign investor selling continued to weigh on sentiment, although easing crude oil prices and hopes of a US-Iran peace deal limited the downside.
The Sensex was at 72,304.37, down 175.92 points or 0.24% at 9:27 am, after opening at 72,192.89. The Nifty 50 was at 22,535.90, down 84.55 points or 0.37%, after opening at 22,543.70.
Both benchmarks are down around 2.6% and 2.3%, respectively, so far this week and are heading for an eighth consecutive weekly decline, which would be their longest losing streak in 25 years.
Markets will remain closed on Friday for a local holiday.
FII SELLING REMAINS A KEY CONCERN
Foreign investors sold Indian shares worth Rs 10,148 crore on Wednesday, according to provisional data. They have sold around $3.6 billion worth of Indian equities over the past five sessions, taking their year-to-date selling to $27.8 billion.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said sustained FII selling had intensified over the past two sessions.
“The sustained FII selling became intense during the last two trading days when the FIIs sold equity for a total of Rs 20,128 crores. With the US 10-year bond yield rising further to 5.3%, FIIs may continue to sell,” he said.
Vijayakumar also pointed to the contrasting nature of FII activity, with foreign investors selling through exchanges while continuing to invest through the primary market and buying mid- and small-cap stocks.
CRUDE OIL EASES
Brent crude futures slipped to around $98 a barrel after Tehran said it had received Washington’s response to its latest ceasefire proposal. The easing in oil prices has offered some relief to Indian markets after crude and global bond yields had emerged as major sources of pressure.
At the time of the market open, Brent crude was at $97.13, down 0.92%, while WTI crude was at $89.40, down 1.13%.
India’s dependence on imported crude means a sustained decline in oil prices could ease concerns around inflation, the import bill and corporate margins.
“This appears to be a short-term phase in the market. Things will turnaround when crude declines. And there is hope on that front with the Brent crude declining below $98,” Vijayakumar said.
IT GAINS, AUTO AND METALS DRAG
The opening was mixed across sectors. Nifty IT was up 1.22%, while Private Bank gained 0.83% and MidSmall IT & Telecom rose 0.42%.
However, Nifty Auto was the biggest sectoral drag, falling 2.90%. Realty declined 1.51%, Media fell 1.45%, Metal dropped 1.10% and Pharma declined 0.88%.
The broader market also remained under pressure. Nifty Midcap 50 fell 0.76%, Midcap 100 declined 0.69% and Smallcap 100 dropped 1.06%. India VIX rose 2.66%, signalling higher volatility.
Among Sensex stocks, Kotak Mahindra Bank rose 2.73%, Infosys gained 1.63%, HCLTech advanced 1.49%, TCS rose 1.24% and HDFC Bank gained 0.68%.
On the other side, M&M fell 2.91%, BEL dropped 1.72%, Eternal fell 1.64% and Titan declined 2.04%.
Vijayakumar said investors could use the weak phase to focus on quality large-cap stocks.
“Investors can use this weak phase in the market to accumulate high-quality stocks, particularly large-caps in growth segments where the risk-reward ratio is favourable for investment,” he said.
