5 hours Ago
Foreign portfolio investors (FPI) dumped stocks on Tuesday as the rupee touched a new life low, a day after shock data on India's trade deficit in November. The market fall, a day ahead of an expected interest rate cut in the US, also comes at a time of increased supply through initial public offers. On Tuesday, in addition to cash sales, FPIs raised bearish bets on Indian derivatives.
Trade data showed markets are in oversold territory, with chances of volatility increasing. Also read | BSE data showed FPIs net sold Indian shares worth a provisional 6409.86 crore as the rupee plunged to a new low of 84.
93, before recovering to close down three paise at 84.90. Though local institutions net purchased a provisional 2706.
48 crore, that was not enough to prevent the Nifty and Sensex from falling the most in nearly three weeks. While the Nifty tanked 1.35% to 24,336, the Sensex shed 1.
3% to close at 80684.45. Trade deficit's surge Data released on Monday showed India's goods trade deficit in November shot up to nearly $38 billion, an all-time high, as imports rose and exports fell.
"The rupee seems to have spooked FIIs whose dollar returns are affected by a weaker local unit," said Andrew Holland, CEO, Avendus Capital Public Markets Alternate Strategies. "The selling is happening amid increased supply (IPO/QIP), and I don't see any catalysts except from next month when Donald Trump takes charge of the White House and third-quarter earnings releases get under way." Also read | Initial public offerings worth 28,500 crore have hit the Street so far this month, and with a dozen more expected, the figure is expected to cross November's 31,100 crore.
Apart from cash selling, FPIs increased bearish bets on index futures (Nifty and Bank Nifty) by a whopping 16060 contracts overnight to 91098 contracts on Tuesday, NSE data showed. "FII selling in cash and in derivatives suggests they are bearish for now, ahead of the Fed policy where the chair's commentary will be parsed by the Street," said Rajesh Palviya, head of derivatives and technicals at Axis Securities. Put-call ratio dips Apart from this, aggregate Nifty put-call ratio fell further, suggesting the market is in oversold territory, said Rohit Srivastava, founder of IndiaCharts.
The ratio which was 1.12 on Friday declined to 0.9 on Monday and 0.
65 on Tuesday. Over the period, the Nifty has fallen 1.78% through Tuesday's closing as fewer puts were sold relative to index calls.
NSDL data showed that FPIs who sold shares 1.16 trillion in the past two months due to poor company earnings and rising US bond yields turned net buyers of 25891 crore this month. Also read | Tuesday's fall was led by index heavyweights HDFC Bank, Reliance Industries, Bharti Airtel, Tata Consultancy Services Ltd and ICICI Bank, which accounted for almost half of Nifty's 332.
25 point fall, which saw 49 out of 50 stocks close in the red. Cipla was the lone Nifty stock to close in the green by 0.2%.
Vix jumps Fear gauge Vix jumped by 3.31% to 14.49, coinciding with the fall.
Over the past week, the gauge has jumped 5%, underscoring rising uncertainty among market participants. The US Fed is widely expected to cut interest rates by 25 basis points to a 4.25-5% range.
However, investors will be keenly watching for any hints on the Fed's future rate loosening trajectory in light of inflation and strong growth in the US. "Dow will react to any hawkish commentary while our markets could take cues from there," said Avendus' Holland. Also read | Since the Fed began cutting rates around mid-September, US 10-year benchmark bond yield has risen by 19% to 4.
4%, on fears of rising inflation by new import tariffs proposed to be introduced by president-elect Donald Trump who takes office on 20 January. Over the same period, the US dollar index has risen by 6.3% to 106.
92..
