Stock Markets This Week: FII Selling, Global Cues, Earnings… - Check Out Key Triggers

Stock Markets This Week: As the calendar year 2024 inches towards its end, the all-gain story of Indian stock markets is correcting its curve. Bulls are driving Dalal Street on the back of strong global cues and a large exodus of foreign investors and investors’ focus is likely to remain on key market triggers in the weeks to come. 

The market participants will be closely monitoring the assembly elections in the state of Maharashtra by the end of this month apart from the pace of foreign fund outflows. 

The return of Donald Trump to power in the United States and his first actions as the chief of the world’s economic power centre are also likely to affect mother markets with tremors, eventually transitioning to D-Street. With hopes of the resolution of key geopolitical conflicts, markets are expecting positive outcomes from Trump’s intervention in the Middle East and Ukraine. 

US dollar, crude oil prices, and domestic and global macroeconomic data will be other key focus areas for investors in the coming weeks. 

A Spree of Losses for Nifty, Sensex

Between June 2nd to September 22nd, the National Stock Exchange’s ( NSE ) benchmark index Nifty 50 recorded only three losses out of 17 weekly closures. However, the trajectory shifted drastically in the last seven weeks, where the number of losing weeks has doubled to six. The index ended the previous week 2.55 per cent lower. 

In October, the key index lost more than 6.2 per cent of its value whereas it is already 2.78 per cent down for November. Where BSE’s Sensex fared marginally better during this period, the losses recorded in a nearly two-month-long downturn acted only as a speed breaker to the upward trajectory of Indian stock markets.

Sectorally, Nifty IT, the index tracking India’s biggest information and technology companies, plunged by over 15.5 per cent since October 01 while Nifty Realty shed off over 14 per cent of its market value during the same period. The story for the FMCG sector got worse with Nifty FMCG losing over 16 per cent whereas Pharma registered a relatively moderate drop of 6.6 per cent. 

FII Widrawl from Indian Markets

The FII activity will remain under the spotlight for domestic investors as the bourses have suffered more than Rs 1.4 lakh crore rout in FII outflows in the last one and a half months which moved partly towards lucrative short-term opportunities in the Chinese market led by economic stimulus and partly towards election-frenzy of US markets.

“Even after heavy selling, India still remains one of the top destinations for foreign portfolio investment among Asian markets, holding around $930 billion, or 17.6 per cent of the total market,” said Manish Goel, Founder & Director, Equentis Research and Ranking. 

Long-Term Investors to Keep Buying

Despite the walkout of foreign money, domestic investors continued to accumulate equities at better valuations, stabilising the markets and preventing them from a potentially ugly crash.  

Experts suggest that current valuations are ideal for domestic retail investors to pile up more long-term positions as Indian markets are well-positioned for strong returns over the next few years. 

“Based on the current valuation multiple of 19x (on FY26 basis), the index offers a potential upside of up to 26.4 per cent with limited downside risk. This upside makes current levels an attractive entry point for long-term investors,” said Goel. 

Goel also said that retail investors can capitalise on the current market volatility, by focusing on high-growth sectors. “The current market presents an exciting opportunity for wealth creation in the long run.”