Sensex, Nifty open flat as global uncertainty fuels cautious sentiment

The S&P BSE Sensex gained 321.03 points to 81,371.03, while the Nifty50 added 73.45 points to 24,869.20.

Benchmark stock market indices opened flat on Tuesday as concerns over the escalating Middle East conflict kept investors cautious. Meanwhile, market participants are closely watching local quarterly earnings reports and the Reserve Bank of India's (RBI) upcoming monetary policy decision.

The S&P BSE Sensex gained 321.03 points to 81,371.03, while the Nifty50 added 73.45 points to 24,869.20 as of 9:50 AM.

Both indices have recorded losses for six consecutive sessions, marking their longest losing streak in a year. This decline is attributed to growing fears over the Middle East conflict, which has dampened risk sentiment, alongside foreign investors pulling funds, shifting their focus towards China.

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that market has turned weak responding to negative cues from escalating geopolitical tensions in the Middle East, massive FPI selling and concerns surrounding the election results due today.

"The most important trigger which pulled the Nifty 5.6% down from the peak has been the sustained big FPI selling during the last six trading days. There are enough indicators to show that FPIs have been following a ‘Sell India, Buy China’ strategy. Elevated valuations in India and cheap valuations for Chinese stocks triggered this change in FPI strategy," he added.

These are times of abnormal moves in the indices. Hang Seng has spiked 32% in the last one month and Shanghai composite rose 8% in a day. Compared to that, the Indian market is relatively stable, though weak. A significant fact is that the underperformance is India-specific since the US, Europe and other emerging markets are stable.

An important data to note is that the net FPI selling of Rs 50011 crores during the last six trading sessions has been more than offset by the DII buying of Rs 53203 crores. Yet the market has corrected by 5.6% impacted by the weak sentiments. The best strategy now is to accumulate high quality fairly valued bluechips like the leading financials and IT stocks.