FIIs offload ₹90 crore in Indian equities as crude prices dip; DIIs invest ₹783 crore; check details

As per the NSE data, FIIs cumulatively bought ₹6,727.34 crore of Indian equities, while they sold ₹6,817.63 crore — resulting in an outflow of ₹90.29 crore on Friday. Meanwhile, DIIs infused ₹7,150.57 crore and offloaded ₹6,367.32 crore, registering an inflow of ₹783.25 crore.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) maintained a status quo on repo rates and policy stance, in line with Street estimates. The rate-setting panel unanimously decided to keep the repo rate unchanged at 6.5 per cent on Friday. The central bank also retained its policy stance as the “withdrawal of accommodation” with five out of six MPC members voting in favour of this.

“The risk of higher inflation led the RBI to become more realistic in their policy approach. The central bank maintained a hawkish tone on liquidity management, as they may consider OMO to contain liquidity in the system, which led to India’s 10-year yield inching higher,” said Vinod Nair, Head of Research at Geojit Financial Services.

‘’The market, however, reacted positively, as the status quo on the growth rate and a further drop in oil prices provided near-term support,” added Nair.

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Stock Market Today

Domestic equities rallied for the second consecutive day on the back of the status quo maintained by RBI in its monetary policy today along with positive global cues. Nifty 50 today closed at 19,653.50, up 108 points, or 0.55 per cent while Sensex closed 364 points, or 0.55 per cent, higher at 65,995.63.

The BSE Midcap index rose 0.66 per cent while the Smallcap index ended 0.56 per cent higher. For the week, the Sensex rose by 0.25 per cent while the Nifty 50 inched up by 0.08 per cent. On the other hand, the BSE Midcap index fell 0.81 per cent this week while the Smallcap index moved up by 0.79 per cent.

India’s benchmark 10-year bond yield posted its biggest one-day jump in 17 months on Friday with the overall bond yields expected to rise further, on open marker sales of bonds through auctions. The 10-year yield rose to 7.3645 per cent, with the 15 basis points increase its biggest single-session rise since May 4, 2022.

How did FII selling impact Indian stocks?

According to Geojit’s Dr. V K Vijayakumar, apart from the macro benefits the crude correction will reflect positively on the stocks of oil consuming industries like paints, aviation and tyres.

‘’Sustained FII selling has impacted banking stocks in spite of their sound fundamentals. Q2 results of banks will be good and their valuations are attractive. This presents a good buying opportunity now,” he said.

Softer crude oil prices in the long run will positively impact capital goods and auto stocks. ‘’Capital goods stocks will continue to do well. Q2 results of autos, too, will be good, gaining from soft commodity prices. The market will start discounting this in advance,” added Dr. V K Vijayakumar.

Also Read: India’s bond yield posts biggest single-day jump in 17 months; What’s fuelling the rise?

Where are markets headed?

Analysts expect the market to remain range-bound with a bout of volatility given the uncertainty still looms globally, despite the ease in US 10-year bond yield and fall in crude oil prices.

The recent bounce has certainly eased some pressure but we are now again at the hurdle of the short term moving average (20 EMA), according to Ajit Mishra, VP – Technical Research, Religare Broking. 

‘’We need sustainability above the same for a further recovery towards 19,800 else the decline would resume,” said Mishra. Meanwhile, traders should remain focused on stock selection and position management until we see clarity over the next directional move, according to the analyst.

‘’The positive takeaway was that Nifty recouped all of its last three-days losses on the back of firm global cues. Sentiments got a lift after US Treasury yields retreated and as oil prices plummeted. Technically, Nifty’s biggest hurdles for Monday’s trading session is seen at the 19,707 mark, while confirmation of strength is only above the 19,907 mark,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

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Updated: 06 Oct 2023, 10:10 PM IST