Indian stocks are on track for their longest monthly losing streak in over 23 years. The Nifty 50 and Sensex indices continue to underperform compared to global peers, languishing in correction territory. Market analysts point to significant foreign portfolio investor (FPI) outflows from Indian shares.
These outflows are set to rise to the second highest level on record, unsettling investors seeking stability in emerging markets. India’s small-cap index is also on course for its worst monthly drop since March 2020. The downturn has hit large-cap, mid-cap, and small-cap segments, showing the widespread nature of the current market challenges.
“FIIs have pulled out Rs 70,000 crore in response to global economic concerns, further impacting the Indian market,” said Bharath Rajeswaran, a market analyst in Bengaluru. However, there may be early signs of a market bottom. The fall in US 10-year bond yields hints at easing liquidity pressures in the global market.
This could provide a strategic opportunity for Indian equity investors despite prevailing uncertainties. “The Nifty has declined 13% from its peak, which may suggest a market bottom as US 10-year bond yields exhibit a bearish reversal pattern,” Rajeswaran noted.
Indian market challenges unsettle investors
“This development indicates improved conditions that could potentially stabilize the market.”
Amid the current decline, experts advise investors to remain vigilant. They suggest considering strategic investments in fundamentally strong companies. “Despite the broader market volatility and FII exodus, easing liquidity pressures could favor well-placed investments in the Indian equity market,” said Savio D’Souza, an investment strategist.
Indian benchmark indices Sensex and Nifty 50 are expected to open on a weak note on January 27. This follows cues from the GIFT Nifty, which was trading around 22,975 earlier this morning. Wall Street’s main indexes also closed lower on Friday.
Investors reacted to mixed economic data and earnings reports as they geared up for a week loaded with key releases and a Federal Reserve meeting. FIIs continued their selling streak, offloading equities worth Rs 2,758.49 crore on January 24. In contrast, domestic institutional investors purchased equities worth Rs 2,402.31 crore on the same day.
As the trading session approaches, experts recommend keeping a close watch on market developments. They caution to be prepared for a potentially volatile day.