Indian equity indices falter after brief surge as FIIs alter buy strategy
Indian markets fluctuate as foreign investors rethink strategy; JP Morgan's inclusion boosts outlook
The equity benchmark indices of India experienced a brief surge in early trading on Friday, following a three-day downward trend. However, this optimism was short-lived as they soon reverted to a negative trajectory. The 30-share BSE Sensex initially climbed 187.71 points, reaching 66,417.95, while the Nifty rose 49.8 points to 19,792.15. Unfortunately, these early gains were quickly eroded, with the Sensex falling 123.33 points to 66,106.91 and the Nifty dropping 71.25 points to 19,671.10.
Among the companies listed on the Sensex, State Bank of India, Bajaj Finserv, IndusInd Bank, Maruti, and Mahindra & Mahindra emerged as the key winners. On the flip side, Wipro, Power Grid, Titan, and Tata Steel were among the companies that struggled.
Asian markets presented a mixed bag. While Seoul and Tokyo found themselves in negative territory, Shanghai and Hong Kong markets managed to stay afloat. Meanwhile, the American markets closed on a negative note on Thursday.
V K Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, highlighted that Foreign Institutional Investors (FIIs) have altered their ‘Buy India strategy’ over the past three months. This has resulted in a steep sell-off in September, amounting to ₹16,934 crore.
Contrastingly, a major positive development has been JP Morgan’s decision to include India in the emerging market bond index from June 2024 onwards, with a weightage of 10%. According to Vijayakumar, this inclusion will lead to a decrease in bond yields and the subsequent fall in borrowing costs will enhance companies’ bottom lines.
Brent crude, a global oil benchmark, witnessed a 0.53% increase, reaching US$93.79 per barrel. Exchange data revealed that FIIs sold equities worth ₹3,007.36 crore on Thursday.
Rakeshh Mehta, Chairman of Mehta Equities Ltd, described India’s inclusion in JP Morgan’s emerging markets bond index as a significant development. He said, “This would give a booster access to global investors to participate in the world’s fastest-growing large economy.”
On Thursday, the BSE benchmark fell 570.60 points or 0.85% to settle at 66,230.24. Similarly, the Nifty declined 159.05 points or 0.80% to end at 19,742.35.
