FIIs outflows, geopolitical concerns hit Indian equities

Nifty 50 of the National Stock Exchange recedes 175.8 points or 1.76% to close the week’s trade at 9,788.60

Key Indian equity indices — the BSE Sensex and the NSE Nifty — witnessed further correction and closed lower by almost two per cent during the week ended Friday, as persistent outflow of foreign funds on the back of a weak rupee, coupled with geopolitical risks, suppressed investors’ sentiments.

However, the indices pared most of their losses towards the later half of the week and closed on a flat note as sentiments were buoyed by continuous pumping in of funds by domestic institutional investors (DIIs) and bargain hunting.

On a weekly basis, the 30-scrip Sensitive Index (Sensex) of the BSE plunged by 638.72 points or two per cent to close at 31,283.72.

Similarly, the Nifty 50 of the National Stock Exchange (NSE) receded by 175.8 points or 1.76 per cent to close the week’s trade at 9,788.60.

“Carrying on from last week, markets continued to correct further this week. A bounce India has sharply increased its exposure to US government securities with holdings worth $135.7 billion (Dh498 billion) at the end of July, official data showed.

Neighbouring China continued to top the charts with holding to the tune of $1.166 trillion, followed by Japan with exposure worth $1.113 trillion.

In recent months, India has increased its purchase of American government securities and the country is the third largest holder among the Brics group after China and Brazil ($271.9 billion). At the end of July, Russia held securities worth $103.1 billion. According to the latest data from the US Treasury Department, India’s holding of the securities touched $135.7 billion as of July end — also the highest in a year.

There has been a significant jump in the exposure compared to June when it stood at $130.3 billion. Since February this year, India’s holding of these securities has been on the rise.

At the end of January, the exposure was just $113.7 billion. back towards the end of the week helped to curb the losses,” Deepak Jasani, Head — Retail Research, HDFC Securities, said.

“Sectorally, the top gainers were the metal, realty and auto indices. The top losers were the PSU banks, pharma and FMCG indices,” he added.

Losing streak

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the Indian markets snapped a seven-day losing streak on September 28 and ended with modest gains as traders covered their short positions on the eve of September series derivative expiry. Market observers pointed out that the seven-day fall was the longest losing streak for the indices after a nine-day fall that occurred during December 1326, 2016.

“The geopolitical wave continued for yet another week, this time from Indian forces taking military action against militant’s hideouts in Myanmar,” Desai said.

D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, said: “In the week gone by, investors sold equities on the back of geopolitical concerns between the US and North Korea.”