FIIs turned net buyers after 38 days, pumping ₹9,947 Cr into Indian equities
The Indian stock market experienced a day of consolidation on November 26, 2024, following a robust 5% rally in the preceding two trading sessions. Both benchmark indices, the BSE Sensex and NSE Nifty 50, showcased mixed trends as investors navigated through global cues, domestic developments, and sector-specific movements.
Benchmark Indices Overview
The BSE Sensex hit an intraday high of 80,482 before retracing to a low of 79,900, marking a swing of nearly 600 points. The index hovered around the 80,000 mark in the later part of the session, with marginal losses. On the other hand, the NSE Nifty 50 reached a peak of 24,343 before consolidating at the 24,200 level.
Broader market indices, including the Nifty Midcap 100 and Smallcap 100, outperformed the benchmarks, trading in positive territory. These movements reflected investor interest in midcap and smallcap stocks despite cautious sentiment in the blue-chip space.
Sectoral Performance
Sectoral indices provided mixed signals. FMCG, IT, Metal, and Realty sectors extended support to the benchmarks, while others faced selling pressure. The India VIX, a measure of market volatility, rose by 2%, reflecting heightened uncertainty.
Key Gainers
Infosys led the Sensex gainers with a rise of over 2%, supported by positive cues in the IT sector.
Tech Mahindra, HCL Technologies, Bharti Airtel, Titan, and Tata Steel also registered gains, contributing to the market’s resilience.
Key Losers
UltraTech Cement and NTPC were among the laggards, each slipping by around 0.5%.
Adani group companies saw declines following reports of potential downgrades by Fitch and allegations of bribery charges against key executives.
Adani Group Developments
Shares of Adani group companies weakened as Fitch Ratings placed some of the group’s bonds under review for a possible downgrade. This development followed allegations of bribery charges against key executives by US authorities. While US-based GQG Partners reaffirmed its confidence in the group, TotalEnergies, a French energy giant, announced a pause in new investments citing corruption concerns. These mixed signals added to the uncertainty surrounding Adani stocks, impacting broader investor sentiment.
Institutional Investment Trends
Foreign Institutional Investors (FIIs) turned net buyers of Indian equities for the first time after a record 38-day selling streak. On November 25, FIIs bought shares worth ₹9,947.55 crore, the highest since September 20. This inflow was primarily driven by MSCI rebalancing, which allocated a higher weightage to HDFC Bank, sparking buying activity.
Conversely, Domestic Institutional Investors (DIIs) offloaded shares worth ₹6,907.97 crore, reflecting profit-booking tendencies. The tug-of-war between FIIs and DIIs highlights contrasting views on the market’s near-term trajectory.
Global and Domestic Cues
Domestic Factors
Credit ratings agency S&P Global revised India’s GDP growth forecast for FY26 to 6.7% from an earlier estimate of 6.9%, citing high interest rates and reduced fiscal stimulus. However, the agency maintained its FY25 growth projection at 6.8%, with the September quarter GDP data due later this week.
Global Factors
Global markets presented mixed signals. In Asia, Japan’s Nikkei dropped 1.5% despite better-than-expected service PPI data. Markets in Taiwan, South Korea, and Singapore also recorded declines of up to 0.7%. Meanwhile, Hong Kong’s Hang Seng and China’s Shanghai Composite posted modest gains, reflecting localized optimism.
In the US, major indices closed at record highs, bolstered by optimism over Donald Trump’s nomination of Scott Bessent as Treasury Secretary. The Dow Jones rose 1%, while the S&P 500 and NASDAQ added 0.3% each. These developments contributed to a relatively supportive backdrop for global equities.
IPO Market Activity
The primary market remained active with several IPOs drawing investor interest:
Enviro Infra Engineers IPO closed for subscription on Tuesday, having garnered 12.5 times subscription.
In the SME segment, Rajputana Biodiesel IPO opened for subscription, while Rajesh Power Services IPO entered its second day.
Tuesday marked the final subscription day for Lamosaic India IPO and C2C Advanced Systems IPO, keeping the primary market momentum strong.
Key Analyst Insights
Dr. V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, expressed caution about the sustainability of the recent rally. He attributed the recent uptrend to short covering and sentiment-driven reactions, such as the Maharashtra election results. Dr. Vijayakumar emphasized that earnings concerns remain a significant headwind, and the impact of foreign institutional buying could be temporary.
He noted that leading banks like HDFC Bank would likely remain resilient due to consistent buying and attractive valuations, offering a silver lining in an otherwise cautious outlook.
Commodity and Currency Updates
Oil Prices
Global oil prices declined following comments from Scott Bessent, the Treasury Secretary nominee, who advocated for increased US production. Additionally, indications of a possible ceasefire agreement between Israel and Hezbollah contributed to the dip.
Indian Rupee
The Indian Rupee appreciated by 0.2% against the US dollar on Monday, settling at ₹84.29. This strength was in line with gains in other Asian currencies, driven by improved risk sentiment.
Market Outlook
The Indian stock market faces a mixed outlook as domestic and global factors weigh on sentiment. While strong FII inflows and resilient banking stocks provide support, concerns over GDP growth, high interest rates, and external uncertainties could limit the rally.
Sectoral performance will likely remain a key determinant of market movements. IT, FMCG, and Metal sectors appear well-positioned to sustain their momentum, while pressure on specific stocks like those in the Adani Group could pose challenges. Midcap and smallcap segments may continue to attract investor interest, given their recent outperformance.
On November 26, 2024, the Indian stock market reflected a consolidation phase, with benchmark indices showing limited movement amid mixed sectoral performances. Global cues, institutional investment trends, and domestic economic developments shaped the day’s trading activity. As markets navigate these factors, investor focus will remain on key indicators such as GDP data, global economic conditions, and corporate earnings, which will influence the trajectory in the coming weeks.
