Foreign funds have withdrawn over Rs 25,000 crore (about $3 billion) from the Indian market in the last seven trading sessions, according to data from CDSL and BSE. This net outflow by foreign portfolio investors (FPIs) is one of the sharpest in recent months and has been compared to the outflows seen during the beginning of the Covid pandemic in March 2020. On Tuesday alone, FPIs pulled out Rs 3,115 crore, contributing to the sell-off in the market.
The sell-off was driven by profit booking and concerns over global economic risks. Several sectors, including PSU banks, railways, and power utilities, witnessed profit booking after experiencing a significant increase in the recent past. Fitch Group’s statement about South Asian economies being the most affected due to rising hostilities in the Red Sea and India’s economic forecast facing risks further dampened global sentiments.
Among the stocks in the sensex, HDFC Bank was the major contributor to the index’s drop, accounting for nearly a third of it. Reliance Industries, Infosys, and SBI were also leading contributors to the sensex’s slide. However, strong buying in ICICI Bank, L&T, and Sun Pharma helped cushion the crash in the index.
Technically, the market is showing weakness on the charts. Nifty closed 330 points down at 21,239 points and formed a huge bearish engulfing candlestick. It also broke the crucial support of 21,300 points with a head and shoulder pattern. The next support lies at 21,000 points, coinciding with the 50-day moving average (DMA). If this support is broken, nifty may see a significant correction, according to experts.
The net outflows by foreign funds and the market sell-off highlight the cautious approach of investors amid global economic uncertainties. The Indian market will closely watch for any further developments that could impact investor sentiment and market performance.
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