No festive cheer for investors; FIIs continue to exit India

New Delhi (TIP)- There is little to no festive cheer for investors as the equity market extended its losing streak for a fifth straight session on Thursday. Persistent foreign fund outflows, weak global cues and renewed concerns around the US H-1B visa norms, which is expected to weigh on the earnings outlook for India’s IT sector, dragged sentiment lower.At the close on Thursday, the Sensex fell 555.95 points, or 0.68%, to 81,159.68, while the Nifty slipped 166.05 points, or 0.66%, to settle at 24,890.85. In the past five trading sessions, the two benchmarks have plummeted about 1.8-1.9% each.
The broader markets also mirrored the benchmarks on Thursday, with the Nifty Midcap100 and Smallcap100 falling 0.6% each. Sectorally, most indices closed in the red, with realty and IT stocks leading the declines.
Siddhartha Khemka – Head of Research, Wealth Management, Motilal Oswal Financial Services, said that on the global front, investors remain cautious ahead of key US economic releases, including GDP and initial jobless claims later on Thursday, followed by the PCE price index (a key gauge of US inflation) due Friday.
Khemka expects markets to remain under pressure in the near term, tracking global headwinds, macroeconomic data releases, and developments around the India–US trade talks. Concerns over economic growth persist amid the impact of rising global commodity prices, weakening rupee and US tariffs, adding to investor caution.
Analysts at Baja Broking stated that continuous foreign fund withdrawals and uncertainty around US–India trade negotiations fuelled concerns of a potential Q2 GDP slowdown. At the end of last week’s trading session (September 19), FIIs sold equities worth Rs 180,443 crore through the exchanges. So far this week, they have been net sellers.
VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said that the significant drag on the market throughout this year has been the sustained selling by FIIs. The FII strategy of selling in India and buying in other markets has paid rich dividends as evidenced by the huge underperformance of the Indian market vis-à-vis others. While the Nifty is down 3.6% YoY, the Hang Seng is up by 38.6% and Kospi is up by 33.73%.
“This huge underperformance and the high valuations in India have emboldened FIIs to continue selling in India. The reforms being implemented in India along with the low interest rate regime have the potential to push economic growth and corporate earnings growth higher. This should bring FIIs back to the Indian market. But we don’t know when this will happen on a sustained basis,” added Vijayakumar.