Foreign institutional investors have been net sellers to the tune of around Rs 7,000 crore so far in July against net buying in previous five consecutive months.
Bears took charge of Dalal Street for second consecutive session after Finance Minister Nirmala Sitharaman refused to tweak super-rich surcharge on FPIs. However, some respite may be around the corner amid rising hopes of a rate cut from Federal Reserve, which shall increase flow in emerging markets including India.
A slowdown in the global economy and concerns over earnings recovery had already thrown investors in a loop, but a rate cut by RBI could be on the cards as inflation stayed under the target of 4 percent.
Benchmark indices fell sharply for second straight session on July 19. The BSE Sensex plunged 560.45 points or 1.44 percent to 38,337.01 and Nifty50 broke the crucial 11,500 level, falling 177.60 points or 1.53 percent to 11,419.30.
The sell-off also extended to broader markets which continued to be an underperformer this year. Both Nifty Midcap and Smallcap wilted 2.15 percent and 1.8 percent respectively amid weak breadth. About three shares declined for every share rising on the BSE.
On the sectoral front, all were trading in the red intraday on July 19 with Nifty Auto being the biggest loser, down more than 3 percent followed by Bank, FMCG and Pharma that lost 1-2 percent.
The fall was so sharp that more than 300 stocks hit 52-week low including bigwigs such as Maruti Suzuki, M&M, GAIL India, Eicher Motors, Aurobindo Pharma and Yes Bank.
Some of these stocks were trading at multi-year lows including Maruti which was facing the repercussions of a slowdown in the auto industry, that is expected not to recover by end of this year.
“We do not see this pressure easing anytime soon, citing mixed earnings announcements and not so supportive global cues. Traders have no option but to align their positions accordingly and use rebound to create shorts in the benchmark index,” Ajit Mishra Vice President, Research, Religare Broking told Moneycontrol.
He also suggested preferring hedged bets instead of naked trades on the stock specific front, especially before the result announcement.
Foreign institutional investors have been net sellers to the tune of around Rs 7,000 crore so far in July against net buying in previous five consecutive months.
Technically too the market looks weak and experts expect Nifty to test 11,250 levels in coming sessions if it decisively breaks 11,460.
“The underlying trend of Nifty is weak and one may expect further weakness in the coming sessions,” Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.
