Indian Stock Markets Struggle Amidst FII Selling and Weak Q2 Results

Indian stock markets opened flat with a persistent downturn led by foreign institutional investors' sustained selling. Despite resilient mutual funds inflows, weak Q2 earnings and downward FY25 estimates weigh heavily. Sectoral gains were seen in Nifty FMCG, while Axis Bank, ITC, HCL Tech among others emerged as opening session gainers.

The Indian stock markets experienced another challenging day with both indices opening flat. The Nifty 50 index began at 24,418.05 points, reflecting a minor gain of 18 points or 0.08 percent. Meanwhile, the BSE Sensex opened at 80,187.34, gaining 0.15 percent or 122 points.

According to market experts, the 'Buy on Dips' strategy is proving ineffective due to consistent selling by foreign institutional investors (FIIs). The pressure is further exacerbated by disappointing quarter 2 results. "The massive, sustained selling by FIIs, which has reached Rs 98,085 crores up to the 24th of this month, renders the buy on dips strategy unfeasible. Moreover, the consensus downward revision in FY25 earnings estimates and weak Q2 performance are contributing to a slightly bearish sentiment," noted V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

He suggested that the ongoing resilience provided by mutual fund inflows has allowed domestic institutional investors (DIIs) to absorb this significant FII selling. "This can provide some resilience to the otherwise weak market, where despite a 7 percent correction, valuation comfort is limited, except in segments like large-cap financials. Growth stocks may demonstrate more resilience in this challenging market," Vijayakumar added. Sector-wise, Nifty FMCG recorded an approximate 1 percent surge in the opening session, but Nifty BANK and others continued to trend downwards. In the Nifty 50, Axis Bank, ITC, HCL Tech, ICICI Bank, and Sun Pharma were top gainers, while IndusInd Bank, NTPC, L&T, and Shriram Finance faced losses. Elsewhere, other major Asian markets presented a mixed performance, with Japan's Nikkei 225 down around 1 percent, while Hong Kong's Hang Seng gained more than 1 percent. South Korea's KOSPI and Taiwan's Weighted index saw 0.5 percent rises, and Indonesia's Jakarta Composite slightly up by 0.2 percent.

(With inputs from agencies.)