Last week’s market highlight was aggressive buying by the FIIs. They were net buyers, injecting Rs 11,517.92 crore into the cash segment…reports Asian Lite News
The stock market witnessed a sharp rally last week driven by the US Fed Reserve’s rate cut. Next week’s market outlook depends upon several factors like foreign institutional investors (FIIs) activities, futures and options (F&O) monthly expiry, crude oil prices and global macroeconomic data.
Last week’s market highlight was aggressive buying by the FIIs. They were net buyers, injecting Rs 11,517.92 crore into the cash segment. Conversely, Domestic Institutional Investors (DIIs) turned net sellers, offloading Rs633.67 crore in the cash segment.
In the last trading session, Nifty and Sensex climbed to all-time highs of 25,849.25 and 84,694.46, respectively, before closing the week at 25,790.95 and 84,544.31. The Bank Nifty index also showed strength, taking 11 weeks to reach a new peak of 54,066.10.
Among sectoral indices, the construction sector emerged as the top performer, followed by banking, while the pharmaceutical sector ended the week in negative territory. The U.S. Federal Open Market Committee (FOMC) voted 11 to 1 in favour of lowering the federal funds rate by 50 basis points to a range of 4.75 per cent to 5 per cent, marking the first rate cut after more than a year of maintaining rates at a two-decade high.
Interestingly, the usually strong IT index underperformed, ending the week with a 2.75 per cent decline. On the other hand, Nifty Bank, which had lagged, took the lead, gaining 3.5 per cent and finally reaching its all-time high. Midcap and Smallcap indices also underperformed during the week. The market displayed clear signs of sector rotation, as investors shifted focus to sectors with renewed momentum.
Santosh Meena, Head of Research, Swastika Investmart said, “Nifty is trading in uncharted territory, with 25,921 and 26,244 as the next target levels. On the downside, 25,350 has emerged as a crucial support level for the NSE benchmark, and the bullish momentum is expected to persist as long as Nifty remains above this level.”
According to Palka Arora Chopra, Director of Master Capital Services, Nifty Bank Index reached a new all-time high of 54,066.10, forming a strong bullish candle on the weekly charts and closing above previous highs.
“This signals fresh momentum, primarily driven by private-sector banks. The index will likely continue its upward trajectory toward 55,000, with minor resistance at 54,300. On the downside, immediate support is at 53,200, and a breakdown below this level could push the index toward 52,500,” Chopra mentioned.
FIIs Pump ₹14,064 Cr, More Buying Ahead
The foreign institutional investors (FIIs) turned aggressive buyers this week with infusing Rs 14,064 crore in the cash market as Indian markets remained resilient amid robust economy performance, data showed on Saturday.
Total FII investment till September 20 stood at Rs 33,699 crore, taking the total FII investment in the country to Rs 76,585 crore this year to date, as per NSDL data.
Market watchers said that the trend of FII buying is likely to continue in the coming days.
Manoj Purohit from BDO India said the US Federal Reserve made the first interest rate cut in the last four years, by a larger than anticipated margin of 50 bps and the foreign portfolio investors (FPI) fraternity has been conscious about this move and reacted passively.
“The Indian markets reflected their resilience on a positive note basis the strong fundamentals and robust economy performance at the expected GDP growth,” said Purohit.
September witnessed the second highest inflows in 2024 so far, the last one being in March.
The flood of FII money has appreciated the rupee by 0.4 per cent for the week ended September 20. This can boost further FII buying, sayd analysts.
Despite global uncertainties, the primary factors, to make emerging markets like India a sweet spot, are balanced fiscal deficits, rate cut impacts on the Indian currency, strong valuations, and RBI’s approach to keep inflation under control without a rate cut.
To add, the IPOs announced this year attracted a large chunk of foreign funds making the Indian capital market buoyant and a lucrative place to shift their positions from other riskier countries, said analysts.
All eyes on the RBI now whether it follows the suit by making a cut in the repo rate in October or wait till December.
There is a strong case to marginally cut rates to manage food inflation, diluted interest from household savings which impact the retail lending business of banks.
India’s monetary policy has been more conservative despite the Fed’s action so far, said Purohit.
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