Indian Stock Markets Face Challenges Amidst FII Selling and Weak Earnings
The Indian stock markets have experienced a decline for the fourth consecutive week, dropping over 2.5%. Market experts attribute this to foreign institutional investors (FIIs) selling and weak earnings. Key companies like Bharti Airtel, Cipla, Dabur, and L&T are set to announce their quarterly results, which investors will closely monitor. The upcoming expiry of October derivatives contracts is expected to increase market volatility, and new auto sales data will provide further insights.
Ajit Mishra, SVP of Research at Religare Broking Ltd, noted that despite a lack of alignment with global markets, the U.S. market performance remains relevant due to speculation on rate cuts and the upcoming presidential election. Over the past week, the Dow Jones Industrial Average declined by over 2.5%, while the S&P 500 and Nasdaq Composite showed mixed trends.
Both the Nifty and Sensex indices closed near their weekly lows, with Nifty at 24,180.80 and Sensex at 79,402.29. S&P Global Market Intelligence forecasts that the coming week will be filled with economic data from the United States and eurozone, impacting the market amidst the earnings season and U.S. presidential election speculation.
Vinod Nair, Head of Research at Geojit Financial Services, expressed optimism, suggesting that the domestic market might reach an oversold territory, potentially leading to a tactical bounce. He highlighted the resilience of recent manufacturing data, indicating a possible economic recovery in the second half of FY25.
Sectoral indices such as realty, metals, and auto saw notable declines, while IT remained steady. Experts attribute the quarter’s results to a tepid demand environment and margin pressure, affecting FMCG, metal, auto, and realty sectors the most. IT’s relative stability is due to expectations of increased BFSI spending and a favorable outlook in U.S. spending.
Nair added that market consolidation is expected to continue in the short term, with a trend reversal depending on a slowdown in FIIs selling and the outcome of the U.S. presidential election.
Doubts Revealed
FII -: FII stands for Foreign Institutional Investors. These are investors or investment companies from outside India who invest in the Indian stock markets. Their buying or selling can greatly affect the market.
Weak Earnings -: Weak earnings mean that companies are not making as much profit as expected. This can make investors worried and cause stock prices to go down.
Bharti Airtel -: Bharti Airtel is a big telecommunications company in India. It provides services like mobile networks and internet to people.
Cipla -: Cipla is a large pharmaceutical company in India. It makes medicines and healthcare products.
Derivatives Contracts -: Derivatives contracts are financial agreements whose value is based on the price of something else, like stocks. They are used for trading and can affect market prices when they expire.
Volatility -: Volatility means how much and how quickly the prices in the stock market can change. High volatility means prices can go up or down a lot in a short time.
Rate Cut Speculation -: Rate cut speculation is when people think that the central bank might lower interest rates. Lower rates can make borrowing cheaper and can affect the economy and stock markets.
Presidential Election -: The presidential election refers to the process of electing the President in the United States. It can impact global markets because the U.S. is a major economy.
Sectoral Declines -: Sectoral declines mean that certain parts of the economy, like technology or healthcare, are not doing well. This can affect the stocks related to those sectors.
IT -: IT stands for Information Technology. It includes companies that work with computers, software, and technology services.
