Weakness in the dollar index continues to support FII inflows, and retail optimism continues to support flows into domestic funds

FPJ News Service mumbai

The market sentiment is moving in favour of equities on account of easing risks in the Mideast, and high expectations of a favourable India-US trade deal soon. However, the benchmark indices closed lower on profit-taking in banking sector stocks. The 30-share BSE Sensex lost 452.44 points to close at 83,606.46. The NSE-50 (Nifty) fell 120.75 points to 25,517.05.

Weakness in the dollar index continues to support FII inflows, and retail optimism continues to support flows into domestic funds. It makes sense to remain invested but making fresh investments at elevated valuations would be risky, according to senior analysts.

“Investors are now turning their attention to quarterly earnings, and will refocus markets on fundamentals for valuation support. Mid and small caps outperformed in expectation of better earnings driven by consumption and margin expansion,” said Vinod Nair, head of research, Geojit Investments.

Axis Bank, Kotak Mahindra Bank, Maruti, UltraTech Cement, Bajaj Finance, ICICI Bank, Reliance Industries, Tata Steel, Bharti Airtel and HDFC Bank counters witnessed profit-taking by individual and institutional investors. Trent, SBI, Bharat Electronics, Titan and Bajaj Finserv were the top gainers. Global oil benchmark Brent crude dipped 0.15% to $67.67, a barrel.

During periods of heightened volatility, risk-off sentiments and sustained selling of Indian equities by the foreign portfolio investors, DIIs and individual investors (domestic households) have been providing strong support, thereby preserving market stability. The individual participation in Indian equities has increased in the last decade and the ownership pattern shows that their investments are diversified.