Market Under Pressure: Sensex and Nifty Slip Amidst FII Exodus

The Indian stock market faces a major correction as benchmark indices Sensex and Nifty fall significantly. Concerns over foreign investor withdrawals, weak Q2 earnings, and rising valuations lead to a substantial decline. Various factors contribute to sustained FII outflows, affecting India’s market trajectory amidst potential recovery by year-end.

The Indian stock market is experiencing a turbulent phase as benchmark indices Sensex and Nifty have witnessed significant declines, slipping into correction mode. This downturn comes amid widespread concerns over foreign institutional investors (FII) pulling out of the domestic market, weak second-quarter earnings, and overstretched valuations.

In a dramatic shift, the BSE Sensex hit a record peak in late September, only to plummet over the following weeks. Similarly, the NSE Nifty also reached new heights before succumbing to the bear market. The slump is largely attributed to foreign investors withdrawing substantial amounts, spurred by attractive Chinese stocks and elevated domestic stock valuations.

The October correction saw massive FII outflows, with Rs 94,000 crore withdrawn from Indian stocks, marking one of the worst months on record. Contributing factors include weak earnings in sectors such as FMCG and automobiles, while high valuations remain a concern that could impact future market stability unless supported by robust earnings growth.

(With inputs from agencies.)