Profit Booking Drags Indian Indices Amidst Sustained FPI Inflows

Indian stock indices closed marginally lower after hitting session highs, driven by profit booking and sectoral losses. Sensex dipped to 85,571.85 points, while Nifty ended at 26,175.15 points. Continued FPI inflows and upcoming Q2 earnings reports keep the market outlook optimistic.

In a mixed session dominated by profit booking, Indian stock indices ended notably lower despite logging record session highs. The Sensex saw a marginal dip to close at 85,571.85, down 264.27 points or 0.31 percent.

Nifty also concluded the day in the red, closing at 26,175.15 points, a decrease of 40.90 points or 0.16 percent. Sectoral indices including banking, financial services, media, and realty were among the most impacted, as per NSE data.

Vinod Nair, Head of Research at Geojit Financial Services, explained, 'Following the recent impressive surge, the benchmark indices experienced a sideways movement today as investors engaged in profit booking at elevated levels.' He added that market participants are eagerly awaiting Q2 earnings reports, optimistic about a positive outlook.

The US Federal Reserve's significant interest rate cuts by 50 basis points have provided fresh support to Indian markets. This monetary easing typically results in capital shifts to higher-yielding markets, including India, enhancing investor sentiment.

Continued buying by foreign portfolio investors (FPIs) also provided some support to the indices. FPIs increased their investments in Indian stocks, banking on better returns due to interest rate differentials. According to NSDL data, FPIs purchased stocks worth Rs 488.22 crore in September, marking a fourth consecutive month of net buying.

Krishna Appala, Senior Research Analyst at Capitalmind Research, noted, 'Sectors like Public Sector Banks, Defence, and Railways, which saw heavy participation earlier, are gradually being overshadowed by underperformers such as Pharma, Private Banks, and mid-size IT. These sectors, with their attractive valuations, are likely to lead the next market phase for the coming quarters.'

(With inputs from agencies.)