FPIs October Selloff Hits $10.61 Billion

FPIs Continue Record Selling Spree

Foreign Portfolio Investors (FPIs) maintained their relentless selloff in Indian equities, offloading shares worth a staggering Rs 5,684 crore on Wednesday. This brings the total October selloff to an eye-popping $10.61 billion, according to data from NSDL. This relentless selling pressure from FPIs has created volatility across Indian stock markets, making it a challenging environment for investors.

Mixed Day for Indian Markets: Financials vs IT Stocks

Despite a promising start driven by IT stocks, Indian markets witnessed a muted close on Wednesday. The Nifty 50 slipped 0.15% to settle at 24,436, while the Sensex dropped 0.16% to close at 80,090. A sharp selloff in financial stocks erased early gains from the tech sector, which had shown strength earlier in the day.

Among the Nifty 50, 32 stocks ended in the red, reflecting the market’s overall subdued sentiment. The financial sector, in particular, faced the brunt of the selling, overshadowing the gains made by mid-cap IT stocks like Persistent Systems and Coforge, which reported strong Q2 results.

Broader Markets Outperform Amid Mixed Sectoral Performance

While the benchmark indices experienced a dip, broader markets showed resilience. The Midcap and Smallcap indices outperformed, gaining 0.7% and 1.3%, respectively. On the sectoral front, the IT index surged 2.4%, driven by strong earnings reports from key players. However, not all sectors shared the same fortune. Pharma and healthcare stocks slumped, with both indices losing over 1%.

Market Sentiment Dampened by Geopolitical Tensions and Valuations

Indian markets have been under pressure throughout October, with the Nifty and Sensex down 5.8% and 5.7% respectively. Several factors have weighed on market sentiment, including high valuations, weak Q2 earnings, and rising geopolitical tensions in West Asia. Additionally, uncertainty around the upcoming US elections has added to investor concerns.

Companies that missed earnings expectations have faced sell-offs, while those exceeding estimates have enjoyed fresh highs in stock prices, highlighting a selective approach by market participants.

IMF Growth Forecast Remains a Silver Lining

On a more positive note, the International Monetary Fund (IMF) kept its growth forecast for India unchanged at 7% for FY25 and 6.5% for FY26. This stability in growth outlook offers a glimmer of hope for the Indian economy, especially at a time when global growth forecasts have been lowered.

Global Factors Weigh on Indian Markets

The broader global environment has also played a role in dampening sentiment. The US dollar continues to strengthen, and the IMF’s lower global growth forecast, along with rising geopolitical tensions and uncertainty around the US elections, have made investors nervous. In addition, the possibility of a less aggressive approach by the US Federal Reserve in cutting rates has also contributed to the cautious mood in markets worldwide.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.