Investors Discombobulated; Markets Await New Triggers
Investors appear confused as the markets lack immediate catalysts to drive a rebound. Despite this, several strong macroeconomic fundamentals in the Indian economy are expected to provide long-term support.
Continuing their downward trend for the third straight session, the 30-share BSE Sensex declined by 94.73 points on Friday, closing at 83,216.28. The 50-share NSE Nifty slipped 17.40 points to 25,492.30.
“A significant feature of the present market trend is that despite the DIIs buying far more than what the FIIs are selling (Rs 5,283 crore DII buying vs Rs 3,263 crore FII selling on November 6), the market continues to drift down. The huge shorting by FIIs are overpowering the DII and investor buying in the market. The success of the FII strategy of sustained selling in India and moving money to cheaper markets has emboldened them to continue the strategy and continue shorting the market. Short-covering can lead to trend reversal but there are no immediate triggers for that in sight. But markets have an uncanny ability to surprise,” said Dr. VK Vijayakumar, chief investment strategist, Geojit Investments.
He added, “This is an ideal time for investors to churn portfolios in favour of fairly-valued large caps. FII selling has reduced the prices of fairly valued large caps, particularly in banking and pharmaceuticals where growth prospects remain promising.”
Market Summary
- BSE Sensex down for third consecutive session
- DII buying exceeds FII selling, yet market declines
- Short-selling by FIIs dominates current market action
- Potential for trend reversal depends on short-covering triggers
- Growth prospects favorable in banking and pharmaceutical sectors
Author’s Summary: The market faces uncertainty with sustained foreign investor selling against domestic buying, but strong economic fundamentals and attractive large caps offer long-term investment potential.