Indian stock markets witnessed a decline in early trade on Thursday, mirroring weak global trends and persistent foreign capital outflows. The benchmark BSE Sensex dropped over 300 points, while the NSE Nifty slipped below the 22,500 mark in the initial trading hours.
Global Cues Weigh on Sentiment
Asian markets traded lower following a sell-off on Wall Street overnight, as concerns over rising interest rates and geopolitical tensions dampened investor appetite. Japan's Nikkei, Hong Kong's Hang Seng, and South Korea's Kospi all recorded losses, adding pressure on domestic indices.
Foreign Fund Outflows Continue
According to exchange data, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,616.56 crore on Wednesday, extending their selling spree. This marks the fifth consecutive session of net outflows, totaling over Rs 20,000 crore in the past week. Domestic institutional investors, however, remained net buyers, providing some support to the market.
Sectorally, banking, IT, and metal stocks were among the top losers, while defensive sectors like pharma and FMCG managed to stay afloat. The volatility index, India VIX, surged nearly 5%, indicating heightened uncertainty among traders.
Expert Views
Market analysts attribute the sell-off to a combination of global and domestic factors. "The persistent FII selling is a major concern, as it reflects a shift in global risk appetite. Additionally, the lack of fresh triggers and uncertainty over the monsoon session of Parliament are keeping investors cautious," said a senior analyst at a leading brokerage firm.
Technical indicators suggest that the Nifty may find support around the 22,200-22,300 zone, while resistance is placed near 22,700. Traders are advised to adopt a cautious approach and focus on stock-specific opportunities.
The rupee also weakened against the US dollar, trading at 83.50 per dollar, as foreign outflows and a strong greenback weighed on the currency. Bond yields remained steady, with the 10-year benchmark yield hovering around 7.05%.
Market participants will keep a close watch on the release of weekly jobless claims data from the US and the European Central Bank's monetary policy decision later today for further direction.
