Constant FII selling since October bleeds Indian markets; IndusInd Bank, Tata Motors, ONGC top losers

• Indian markets have been under pressure in the last three months as FIIs, the biggest participant in the market, have been selling shares.
• The US Fed’s Hawkish stance, rising Omicron cases, and high inflation are some of the factors concerning investors at the moment, analysts say.
• Shares of almost all sectors — banks, automobile companies, fast-moving consumer goods, metal and pharmaceutical firms — were in red, except for IT stocks.

Indian markets continued to fall even on Friday, as it has been since the last few months, as foreign institutional investors (FIIs) have been selling Indian shares constantly since October.

Indian indices Sensex and Nifty 50 were down almost 2% on December 17 and 5% in the last one month.
Source: Latest data on central depository services (India)

Following the huge selling, there were losses in shares of almost all sectors i.e., banks, auto, pharma, automobile companies, fast-moving consumer goods, metal, energy and pharmaceutical firms, except for IT firms’ stocks.

The US Federal Reserve’s hawkish stance, rising Omicron cases, inflation not in control, disruption in supply due to Omicron are some of the factors concerning the market participants at the moment, said Ravi Singhal, vice chairman at GCL Securities.

Besides, rise in dollar price, signals by the US Fed to hike interest rates are some reasons why FIIs are shifting money from emerging markets like India to developed markets, which will further continue, he said.

The US Federal Reserve on Wednesday said that it will soon end COVID-19 stimulus programmes and indicated to raise interest rates three times next year. This means that the interest rates in emerging markets like India won't be that attractive.

“In the last 20 trading sessions, FIIs have been constant sellers while DIIs [domestic institutional investors] have been net buyers, which is why there is less fall in markets. Besides, markets had run up very fast so currently it is trying to form a base around 17,000 points (Nifty 50). FIIs have been selling since October. They have made fabulous returns in emerging markets like India and now ahead of the holiday season some funds tend to book profits and some due to concerns over Omicron, US Fed signals for a rate hike. So some kind of negativity is there across the globe,” said Kranthi Bathini, director of equity strategy at WealthMills Securities.

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