Sensex, Nifty witness volatile trade as FII outflow dents sentiments

The S&P BSE Sensex was up 50.20 points to 81,870.32 at 9:51 am, while the NSE Nifty50 rose 15.35 points to trade at 25,072.70.

In Short

• Foreign outflows hit four-year high, totaling $7.9 billion
• Smallcap, midcap stocks volatile despite broader market gains
• Analysts expect market consolidation; Q2 earnings outlook mixed

Benchmark stock market indices erased early gains on Wednesday as continued foreign outflows dented Dalal Street sentiments.

The S&P BSE Sensex was up 50.20 points to 81,870.32 at 9:51 am, while the NSE Nifty50 rose 15.35 points to trade at 25,072.70.

Most of the other broader market indices were trading in the green, but volatility has also capped gains in smallcap and midcap stocks.

Sectoral indices were mixed in early trade as Nifty Bank and Nifty Financial Services gained. However, Nifty IT, Nifty Realty, Nifty FMCG and a few others were trading in negative territory.

The top five gainers on the Nifty50 were HDFC Life, Hindalco, SBI Life, BPCL and Wipro. On the other hand, the top losers were Trent, Nestle India, M&M, TCS and IndusInd Bank.

Sentiments on Dalal Street have been hit as foreign outflows surged to a four-year high, according to NSDL data.

It may be noted that foreign outflows from Indian equities so far in October have totalled $7.9 billion, highest since March 2020.

According to analysts, this is happening as investors are redirecting flows to China after Beijing announced stimulus measures to stalled economic growth.

Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “In India the main driver of the bull run has been the sustained domestic flows into the market which has been absorbing all the selling by FIIs.”

“The domestic flows will continue to support the market but elevated valuations will put a cap on the upside. Nifty is likely to consolidate around 25,000 levels. Q2 earnings will be weak except in IT, banking and pockets of autos,” he added.