Indian Stock Markets Slide Amid Global Weakness and FPI Concerns

Indian stock indices plunged on Friday, amid broad-based sell-offs, led by banking and energy sectors. Weakness in U.S. markets, concerns over foreign portfolio investors' compliance, and cautiousness ahead of key economic data fueled the decline.

Indian stock indices saw a significant decline on Friday, the week's last trading day, with all sectoral indices closing in the red. The hardest-hit sectors were banking and energy.

'The recent weakness in U.S. markets has stalled the momentum in Indian markets, causing participants to become cautious ahead of the upcoming jobs data,' said Ajit Mishra, SVP, Research, Religare Broking. Market sentiment was further dampened by selling from foreign portfolio investors.

Vijay Chopra, a market expert, stated, 'A correction of 2 to 3 percent is not a significant drop, given markets are trading at all-time highs. Selling pressure can be attributed to reports that non-registered FPIs will be restricted from market operations.' Additionally, concerns over the Fed rate cuts have made markets more sensitive.

Today marks the deadline for foreign investors to disclose beneficial owners, as mandated by SEBI. Non-compliance might lead to disqualification from investing in India, a key factor behind today's sell-off. This move aims to curb misuse of the FPI route by 'benami' investors, strengthening market integrity. Non-compliant FPIs, lacking proper KYC documentation, offloaded their holdings, contributing to the broad market sell-off, analysts noted. 'The domestic markets reached record highs earlier this week but ended the streak due to profit booking,' said Joseph Thomas, Head of Research, Emkay Wealth Management.

On a global scale, focus shifts to upcoming U.S. economic data to gauge Fed's interest rate direction. US Federal Reserve Chair Jerome Powell hinted at potential rate cuts as inflation aligns with targets. However, he did not specify the cut's magnitude.

Globally, markets remain uncertain with major economic data due, including U.S. payroll data and Fed rate cut expectations. 'Domestically, political risk is rising with state elections imminent and a major ruling coalition partner engaging with opposition leaders,' said Ajay Bagga, a veteran banking and market expert. (ANI)

(With inputs from agencies.)