NEW DELHI: Global cues, foreign fund outflow and December quarter (Q3FY23) earnings are expected to guide India’s equity market this week. The start of the calendar year 2023 hasn’t been good for the local market as worries regarding future interest rate hikes by the US Federal Reserve and sustained selling by foreign institutional investors (FII) have been keeping the bulls in check.
“Beginning in 2023, we are already observing some correction to the Indian equity market's notable outperformance in the prior year. Indian markets are trading lower month-to-date with a significant FII outflow, whereas, the majority of emerging markets rebounded in the first few days of 2023 with net FII inflows,” said Santosh Meena, Head of Research, Swastika Investment.
“The flow of FIIs is a crucial variable in determining the market's future course. We are not witnessing any abrupt drops, though, as DIIs are working to maintain the market,” Meena added. FII sold approximately R 10,000 crore in Indian equity markets last week in which the benchmark BSE Sensex and NSE Nifty shed about 0.45% and 0.19%, respectively, to close at 60,261.18 and 17,956.60.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that FIIs are selling in India and moving money to cheaper markets like China, Hong Kong and South Korea where valuations are much lower.
In 2022, FIIs were selling in China. “This trend has changed to long China and short India. This trend may continue for a few more days. Since DIIs and retail investors are buyers and are keen to buy the dips, the FII selling is unlikely to lead to a sharp correction in the market even though the market appears weak for the near term.”
According to Vijayakumar, CPI inflation falling to 5.72% in December and IIP spurting to 7.1% in November are positive macros which can provide fundamental support to the bulls. After an IT-heavy week, the focus will now shift towards banking stocks. First, markets will react to the HDFC bank’s number.
Participants will be eyeing Indusind Bank, Kotak Bank and ICICI Bank results in the following sessions. Besides, prominent names from other sectors like Hindustan Unilever, Asian Paints, Ultratech Cement and JSW Steel will also declare their results and several others.