Indian Markets Close Lower Amid FPI Sell-Off and Inflation Woes

The Indian stock market indices, Sensex and Nifty, continued their downward trend, primarily impacted by significant foreign portfolio investor (FPI) sell-offs. Despite disappointing earnings and a strong U.S. dollar, experts cite potential stock accumulation opportunities amid cooling valuations and SBI's notable profit increase.

In a continuation of the downward trend observed this week, Indian stock indices closed lower on Friday. The Sensex fell by 55.47 points, closing at 79,486.32, while the Nifty declined by 51.15 points to settle at 24,148.20. Sectoral indices such as PSU Bank, Media, Realty, and Oil and Gas bore the brunt of the losses, according to data from the National Stock Exchange.

Foreign portfolio investors (FPIs) maintained their selling streak, offloading stocks worth Rs 94,017 crore in October, marking a record monthly sell-off. This selling pressure continues into November, with FPIs selling an additional Rs 14,358 crore, as reported by the National Securities Depository Limited. The sustained outflows have contributed to market consolidation amidst disappointing earnings reports and cautionary investor sentiment. Vinod Nair, Head of Research at Geojit Financial Services, indicates that the market's cautious stance also stems from expectations around the US Federal Reserve's continued rate cuts, with a further 25-basis point reduction anticipated in December.

In contrast to the US, India faces mounting inflationary pressures, which, along with the strengthening USD, might lead the Reserve Bank of India to hold interest rates steady. The rupee's depreciation continued, exacerbated by the strong dollar index and ongoing FPI withdrawals, noted Vishnu Kant Upadhyay of Master Capital Services Ltd. Despite these challenges, Krishna Appala from Capitalmind Research suggests potential opportunities for investors to acquire stocks at cooler valuations. Simultaneously, the State Bank of India announced a 27.92 percent increase in net profit for the July-September quarter, signaling robust financial performance.

(With inputs from agencies.)