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A Pleasant Reversal in the market trend–Will it sustain?

Sensex rises 433 pts, Nifty ends above 15,800; TechM, HCL gain, metals shine

Indian indices on Monday extended gains for the third straight session as they ended around 0.85% higher amid positive global cues. Market Closing: Indian indices on Monday closed higher, led by market heavyweights TechM, HCL, L&T, Asian Paints, among others.

Indian indices extended their gains from the previous week and ended higher on Monday, tracking strong cues from the US and potential value buying at lower levels. Globally, shares extended their bounce on Monday, building on Friday’s strong Wall Street close as off-peak oil prices helped sentiment improve and temper fears of prolonged inflation. In Asia, shares rose in Japan, Australia, Hong Kong, Shanghai, and South Korea.

Indian indices on Friday closed higher, posting gains for the third straight day, with technology and metal stocks leading the gains, as easing oil prices tempered inflation fears.

The Sensex gained 457 points, or 0.82%, to close at 53,161.28, while Nifty50 jumped 132.80 points to end at 15,832.05. Sectorally, all the sectors ended in the green, with IT, metals, capital goods, telecom rising the most.

On the 30-stock index, L&T, TechM, HCL, and Infosys were the top performers, while Reliance and Kotak Bank were the top losers.

On the Nifty50 index, ONGC, Coal India, and L&T registered the biggest gains, while Eicher Motors and Apollo Hospitals were the biggest laggards.

FPIs remove ₹45,841 cr so far in June, highest monthly outflow in 2022. Overseas markets prove beneficial..DIIs sustain markets. Bear continues:

FPIs (foreign portfolio investors) have so far pulled out ₹45,841 crore in June which is the highest monthly outflow in 2022 currently.

Overall, in less than six months of 2022, FPIs outflow amounts to ₹2,12,996 crore in the equity market- 16.99 times higher compared to the outflow of ₹12,530 crore in the debt market.

June is not yet over, however, has emerged as the most bearish month for the Indian equities market in terms of foreign funds. FPIs (foreign portfolio investors) have so far pulled out ₹45,841 crore in June which is the highest monthly outflow in 2022 currently. So far this year, the selloff in the equities market is nearly 17 times higher than compared to the selling in the debt market.

This month, as of June 24, FPIs outflow stood at ₹45,841 crore from the equities market – way higher than the previous month’s outflow, as per NSDL data. In May, the foreign funds‘ outflow was at ₹39,993 crore, while in April, the selloff was at ₹17,144 crore.

So far in the first quarter of FY23 (April 2022 – up to June 24, 2022), FPIs outflow is at ₹1,02,978 crore from the equities. In January to March 2022 period, the outflow from equities was to the tune of ₹1,10,018 crore.

The June data has also surpassed the March month deep selloff which had recorded an outflow of ₹41,123 crore. Meanwhile, the outflow was at ₹35,592 crore and ₹33,303 crore in February and January this year.

Overall, in less than six months of 2022, FPIs outflow amounts to ₹2,12,996 crore in the equity market- 16.99 times higher compared to the outflow of ₹12,530 crore in the debt market. FPIs outflow including equities, debt, debt-VRR, and hybrid market stands at ₹2,19,705 crore so far in 2022 to date.

With less than a week left for June to complete, one can only imagine how far FPIs are willing to pull their money from the equities market. The tragedy is that FPIs won’t turn bullish at least in the near term and hence the selling pressure is expected to continue.

On FPIs outflow, it is said, “The RBI’s tightening of the monetary policy and inflated global commodity prices have primarily led the domestic markets to bleed in terms of substantial cash outflows from the equity markets during the last few months. The pace of such withdrawals was last seen when the pandemic spurred in the first quarter of 2020.”

“Globally, the ongoing military conflict between Ukraine and Russia, rising fed rates, and the return of the pandemic outbreak have further added fuel to the fire,” Going forward, , “This short-term pace of negative volatility is likely to slowdown in the coming weeks if not reversed completely.”

According to the BDO India expert, India is still on a better footing as compared to other global markets primarily on account of sustained growth patterns, better GDP numbers, recovering forex reserves, consistent demand from consumers, and good financial numbers by large corporates.

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