Indian equity markets are expected to open with minimal change on Tuesday, December 16, as investors contend with a dual challenge of continuous foreign capital withdrawal and a rupee hitting fresh lows. The much-anticipated trade agreement with the United States also remains out of immediate reach, further dampening sentiment.
Market Indicators Point to Subdued Opening
The Gift Nifty futures were trading at 26,035 points as of 7:51 a.m. IST, suggesting the benchmark Nifty 50 index will commence trading near its previous close of 26,027.3 points. Both the Nifty 50 and the Sensex have been moving sideways over the past fortnight after scaling record peaks on December 1. This period of consolidation is attributed to a lack of significant domestic catalysts and the prolonged wait for clarity on the bilateral trade pact.
FPI Exodus Continues, DIIs Provide Cushion
The pressure on markets is evident from sustained selling by foreign portfolio investors (FPIs). Provisional data shows FPIs offloaded shares worth 14.68 billion rupees on Monday, marking their seventh straight session of net selling. This foreign outflow has been accompanied by a weakening Indian rupee, which has recorded fresh all-time lows for three consecutive sessions.
However, domestic institutional investors (DIIs) have stepped in as a counterbalance. On Monday, DIIs purchased equities worth 17.92 billion rupees. They have been consistent net buyers in every trading session since October 23, providing crucial support and softening the impact of foreign fund exits.
India-US Trade Deal Timeline Remains Uncertain
Market participants are keenly awaiting developments in the India-U.S. trade negotiations. Analysts note that optimism for a deal being finalized before the year-end is waning. While India's trade secretary stated on Monday that the two nations were close to a "framework deal," no specific timeline was provided. This follows comments from India's chief economic advisor last week, who indicated that a comprehensive trade agreement is more likely only by March.
Stocks to Watch on Tuesday
IndusInd Bank: The Reserve Bank of India has granted approval to HDFC Bank to acquire up to a 9.50% stake in the smaller private sector lender.
Geojit Financial Services: Promoter BNP Paribas SA divested its stake in the company via a bulk deal. Exchange data reveals the buyers included founder George John and three other investors.
Arvind Smartspaces: The real estate developer has announced a new residential project in Bengaluru. The company estimates the project has a revenue potential of roughly 5.5 billion rupees.
