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Trading activity of foreign investors and global trends will be the major driving factors for the equity markets
Last week, the BSE benchmark gauge Sensex fell 1,906.01 points or 2.39 per cent. (Representative image)
Trading activity of foreign investors and global trends will be the major driving factors for the equity markets in a holiday-shortened week ahead, according to analysts.
Trading Holiday for Maharashtra Assembly Elections
Leading stock exchanges BSE and NSE have declared a trading holiday on November 20 for assembly elections in Maharashtra.
Election Schedule
Elections to the 288-member state legislative assembly will be held on November 20, and votes will be counted on November 23.
Impact of Elections and Global Indicators on Markets
“The Indian stock market will remain shut on Wednesday, November 20, in observance of Maharashtra assembly elections. The election results, along with key global economic indicators, including US bond yields, dollar index performance, US unemployment claims, flash manufacturing and services PMI data, and Japan’s inflation data, will be pivotal in shaping market direction.
FII Activity and Emerging Market Dynamics
“High US bond yields and a strengthening dollar post-election have impacted emerging markets like India, and FII (Foreign Institutional Investors) activity remains a key factor, influencing Indian equities in the near term,” Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, said.
Other Key Market Influencers
The movement of global oil benchmark Brent crude and rupee-dollar trend would also influence trading in the market, experts said.
Shortened Trading Week and Focus on FII Flows
“This week is also shortened due to a holiday, and with the earnings season largely concluded, attention will shift back to FII flows. Foreign institutional investors have been on a consistent selling spree for the past month and a half. Additionally, traders will keep a close watch on global market trends,” Ajit Mishra – SVP, Research, Religare Broking Ltd, said.
Recent Market Performance
Last week, the BSE benchmark gauge Sensex fell 1,906.01 points or 2.39 per cent.
Equity markets were closed on Friday for Guru Nanak Jayanti.
Decline from Record Highs
The BSE benchmark fell a massive 8,397.94 points or 9.76 per cent from its all-time high, and the Nifty has also lost 2,744.65 points or 10.44 per cent from the record peak.
Sensex hit its record peak of 85,978.25 on September 27 this year, and the NSE Nifty also reached a record 26,277.35 on the same day.
Factors Behind Market Volatility
The sharp fall in the benchmark indices was triggered by foreign investors fleeing the domestic market, weak Q2 earnings and high valuations of equities.
Markets remain volatile on the back of subdued Q2 results, rising dollar index and continuous FII selling over the past month and a half, Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.
FPIs Selling-spree Continues
Foreign investors have pulled out Rs 22,420 crore from the Indian equity market so far this month, owing to high domestic stock valuations, increasing allocations to China, and the rising US dollar as well as Treasury yields.
With this sell-off, Foreign Portfolio Investors (FPIs) have recorded a total outflow of Rs 15,827 crore in 2024 so far.
According to the data, FPIs recorded a net outflow of Rs 22,420 crore so far this month. This came following a net withdrawal of Rs 94,017 crore in October, which was the worst monthly outflow.
Before this, FPIs withdrew Rs 61,973 crore from equities in March 2020.
In September 2024, foreign investors made a nine-month high investment of Rs 57,724 crore.
Eight of Top 10 Most-valued Firms Take Rs 1.65 Lakh Cr Hit in Mcap
Eight of the top-10 most valued firms together lost Rs 1,65,180.04 crore from market valuation in a holiday-shortened last week, with HDFC Bank and State Bank of India taking the hardest hit in line with a weak trend in equities.
The valuation of HDFC Bank tanked by Rs 46,729.51 crore to Rs 12,94,025.23 crore.
State Bank’s market valuation eroded by Rs 34,984.51 crore to Rs 7,17,584.07 crore.
Reliance Industries remained the most valued domestic firm, followed by TCS, HDFC Bank, ICICI Bank, Bharti Airtel, Infosys, State Bank of India, ITC, LIC and Hindustan Unilever.
(With agency inputs)