Due to volatility brought on by prolonged foreign investor selling and increased oil prices, Indian shares reversed gains on Monday, offsetting better-than-expected profits from the nation’s largest private lender, HDFC Bank.
As of 2:11 p.m. IST, the S&P BSE Sensex (.BSESN) was down 0.37% at 60,038.37, while the Nifty 50 index (.NSEI) was down 0.44% at 17,876.50. During the session, both benchmarks had increased by more than 0.5%.
All 11 of the key industry indices fell, with the exception of public sector banks (.NIFTYPSU) and information technology (.NIFTYIT), with metals (.NIFTYMET) losing 1.4% and heavyweight financials (.NIFTYFIN) plunging 0.8%.
The session’s reversal in the stock market nearly coincided with the decline in the banking sector (.NIFTYFIN), which gave up intraday gains of 0.8% in a choppy session.
According to Siddhartha Khemka, head of research (retail) at Motilal Oswal Financial Services, “the volatility in the markets will remain in the short term due to extended selling by foreign portfolio investors (FPI)”.
Foreign selling in Indian equities is the result of high domestic valuations and rising allocations to other markets such as China and Taiwan, which were cut earlier due to COVID curbs, three analysts said.
They also flagged a moderation in domestic investors’ buying as another reason for volatility.
Data showed FPIs have sold 150.68 billion rupees ($1.85 billion) worth of equities in 2023 so far.
FIIs have been net sellers in each of the last sixteen sessions, the longest in six months, according to NSE provisional data. Since Dec. 23, 2022, they have offloaded nearly 239 billion rupees.