FIIs offload ₹12 crore in Indian stocks, analysts see near-term short-covering; DIIs infuse ₹403 crore

As per the NSE data, FIIs cumulatively bought ₹7,739.00 crore of Indian equities, while they sold ₹7,751.43 crore — resulting in an outflow of ₹12 crore on Friday. Meanwhile, DIIs infused ₹7,932.73 crore and offloaded ₹7,530.04 crore, registering an inflow of ₹402.69 crore.

FIIs have sold Indian equities since October on record-high US bond yields, strength of the dollar index, and the geopolitical risks due to the Israel-Hamas war. These combined factors have since weighed on market sentiment.

The US Federal Reserve decision to hold rates and refrain from making hawkish indications has emboldened the bulls to make a strong comeback in the mother market US with S&P rising 1.9 per cent yesterday, according to market analysts.

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Experts project short covering by FIIs in the near-term as they turn buyers over positive global cues. With Brent crude crashing to the $85 per barrel mark and expectations of a pause in rate hikes by the Fed, foreign investors may start buying Indian equities soon, said analysts. This could lead to short covering which can take markets higher despite the uncertainty surrounding the Israel-Hamas conflict. 

‘’Good earnings numbers and expectations that the interest rate will remain stable for now and will decline in H2 of CY2024 have facilitated market recovery. The positive global sentiments can embolden the bulls in India to stage a comeback. Since FIIs are short in the market, short covering is a possibility,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Stock Market Today

Domestic market benchmarks Nifty 50 and Sensex ended higher for the second consecutive session on Friday amid broadly positive global cues as the risk appetite of investors improved on hopes that the end of monetary policy tightening is near.

Nifty 50 today closed at 19,230.60, up 97 points, or 0.51 per cent. The Sensex finally closed at 64,363.78, up 283 points, or 0.44 per cent. The world’s major central banks, including the US Federal Reserve, the Bank of England and the European Central Bank, left rates unchanged this month, fuelling hopes that interest rates have peaked.

“Buoyancy in Asian equities boosted gains in local shares as falling US treasury yields and softening crude oil prices buoyed sentiment, despite weakness in the Gift Nifty index. Markets pared some of its early gains as investors resorted to selective buying due to uncertainty over higher inflation levels, simmering West Asian conflict and its impact on the global economy,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

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Updated: 03 Nov 2023, 09:52 PM IST