Indian stocks off their peaks, settle marginally lower on profit booking
Dec 18, 2023
New Delhi [India], December 18 : Indian stock indices were highly volatile on Monday, to later settle for the day in the red, primarily attributable to profit booking by investors after a consistent rise over the past few weeks.
Sensex closed the session at 71,315.09 points, down 0.24 per cent, whereas Nifty closed at 21,418.65 points, down 0.18 per cent from their Friday closing. The indices touched their all-time highs last week, are are currently hovering around the respective peaks.
India's benchmark Sensex and Nifty posted their longest weekly winning streak in six years last Friday, extending their rally to record highs, on the possibility of an interest rate cut in the US markets in early 2024. The two indices rose about 2 per cent in the week on a cumulative basis.
"We are of the view that the short-term market texture is still bullish but due to temporary overbought conditions we could see range-bound activity in the near future," said Shrikant Chouhan, Head- Equity Research, Kotak Securities.
The strong inflow of funds from foreign portfolio investors (FPIs) lately also supported the stocks to march towards all-time highs.
Notably, foreign portfolio investors have again trained their sight towards India, becoming net buyers in the country's stock market.
Following a cumulative accumulation of Rs 9,001 crore in November, they have again made a beeline to invest in Indian stock markets, with Rs 42,733 crore invested so far in December, data from the National Securities Depository (NSDL) showed.
The latest inflow comes at a time when India reported strong quarterly GDP growth maintaining its fastest-growing major economy tag, inflation in a comfortable zone, and political stability in the run-up to General Elections 2024.
Before November, FPI participation in Indian stocks was lukewarm and they had turned net sellers. They sold Rs 14,768 crore and Rs 24,548 crore, in September and October, respectively.
Manoj Purohit, Partner and Leader - FS Tax, tax and regulatory services BDO India, said, the indication by the US Federal Reserve, the central bank of the US, that further interest rate hikes were unlikely going ahead, had flooded the Indian market with fresh cash flows from the foreign portfolio investors.
Foreign investors typically shift to developing or emerging economies to make money when interest rates are relatively low in advanced economies, let's say here in this case the US.
"FPIs have reversed their position and turned as net buyers in the first week of December 2023. Additionally, the state election results in India and RBI's monetary policy outcome on maintaining status quo on rates also made FPI's stand on India markets positive," Purohit said.
"All in all, the momentum for the Indian cash equities market reflects a promising wind up of 2023 and a strong base for 2024 to start with, taking the foreign investments inflows to a new horizon."
