Sensex, Nifty dip as foreign fund outflows continue amid mixed global trends

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The Sensex and Nifty indices saw a dip in early trading on Friday, weighed down by continuous foreign fund outflows and weak trends in key blue-chip stocks, including Reliance Industries and ICICI Bank, according to PTI.

Market analysts noted that, in the short term, the Indian market is expected to trade sideways as investors await clarity on several economic indicators, including corporate earnings, a boost in domestic consumption, and a shift in foreign fund flows. According to PTI, foreign investors have been steadily offloading their holdings, adding further pressure to the markets.

In contrast to India, the US Federal Reserve recently cut interest rates for the second consecutive meeting, a decision influenced by a "comfortable" inflation print, according to PTI. In India, however, food inflation remains a significant concern, even as the country grapples with slowing economic growth prospects. As a result, market experts are closely watching the Reserve Bank of India's (RBI) upcoming monetary policy meeting next month to see how it may address these pressing issues.

In early trade, the BSE Sensex benchmark declined by 424.42 points, dropping to 79,117.37. Meanwhile, the NSE Nifty saw a decrease of 132.7 points, bringing it down to 24,066.65.

Among the 30-share Sensex pack, major losses were observed in Tata Motors, Reliance Industries, Asian Paints, Maruti Suzuki, NTPC, and ICICI Bank. Conversely, some stocks held their ground, with Infosys, Tech Mahindra, HCL Technologies, Titan, Kotak Mahindra Bank, and HDFC Bank showing gains in early trading.

Foreign Institutional Investors (FIIs) were net sellers, offloading equities worth Rs 4,888.77 crore on Thursday, according to data shared by the exchange. This selling spree by FIIs has been a major factor contributing to market weakness in recent weeks.

"Two divergent trends are currently evident in the market," stated V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, as reported by PTI. "On one hand, there's resilience in the global markets, largely led by the US, while on the other, the Indian market is experiencing sustained pressure from FII selling."

The Asian markets presented a mixed picture, with stock indices in Seoul and Tokyo trading positively, while Shanghai and Hong Kong quoted lower, per PTI. Wall Street closed largely higher on Thursday, which indicates that while global market sentiment remains relatively strong, India continues to face challenges specific to its market and economy.

Prashanth Tapse, Senior Vice President (Research) at Mehta Equities Ltd, commented, "The Federal Reserve's recent cut of its benchmark interest rate by 25 basis points, to a target range of 4.50 per cent to 4.75 per cent, is aimed at addressing inflation. However, Nifty remains under pressure amid ongoing FII selling." According to PTI, he further pointed out the limited movement in Nifty, which he attributes to this persistent selling by foreign investors.

Global oil prices also saw a dip, with Brent crude, the worldwide benchmark, declining 0.71 per cent to trade at USD 75.09 a barrel.

The BSE benchmark had previously fallen sharply by 836.34 points, or 1.04 per cent, to settle at 79,541.79 on Thursday. Nifty, in turn, dropped by 284.70 points, or 1.16 per cent, ending at 24,199.35, according to PTI.

(With inputs from PTI)