The higher levies on stock market transactions in the budget continued to drag investor sentiment for the third successive session with the benchmark Sensex losing more than 109 points amid selling in banking and metal counters.
Foreign portfolio investors (FPIs) have pressed the sale button more furiously than their domestic counterparts.
Provisional data showed them offloading stocks worth ₹2,605 crore on Thursday. As per NSDL data they sold shares valued at $648 million (₹5,420 crore) in the past two sessions.
The FPI selling has been absorbed by domestic institutions and retail investors who remain in a buy mode. Domestic institutional investors made net purchases of ₹2,432 crore in today’s trade.
The rupee closed at 83.70 against the dollar over the previous close of 83.72, which was a record low.
Forex circles expect the domestic currency to remain under pressure due to dollar demand from oil importers and continued selling by FPIs.
The 30-share Sensex opened on a lower note at 79542.11 and sunk more than 671 points to an intra-day low of 79477.83.
It then recovered some lost ground on buying in automobile stocks to settle 109.08 points or 0.14 per cent lower at 80039.80.
The broader index NSE Nifty lost 7.40 points or 0.03 per cent to close at 24406.10.
In the Sensex pack, the shares of Tata Motors surged more than 6 per cent to ₹1,091.05 after Nomura upgraded it to a buy.
“The overnight slump in US equities caused a major fall in domestic markets in early trade due to heavy profit-taking in banking, IT, metals and realty stocks.
“However, markets recouped most of its losses towards the end, with Sensex managing to close above the crucial 80k-mark amid buying in oil & gas and automobile stocks, indicating that investors are willing to bet on good fundamental sectoral stocks despite rising concerns of the stretched valuations of the Indian markets,” Prashanth Tapse, senior VP (Research), Mehta Equities Ltd, said.
While FPIs have sold stocks post Budget, a report from Motilal Oswal Private Wealth (MOPW) sees them coming back.
According to the MOPW report, “Journey to the East” - Alpha Strategist July 2024, the Indian equity market performance over the last three years has been quite impressive, led by stellar growth in corporate profits and robust inflows from domestic institutional investors (DIIs).
However, FPIs have been net sellers over this time period and their ownership of Indian equities was at a decadal low prior to the domestic elections.
“With political continuity in place, FPIs could potentially recommence their “Journey to the East” i.e. equity markets could witness positive net FII flows going forward,’’ the report said.
