Markets Poised for Positive Opening Amid Foreign Investor Sell-Off and Domestic Optimism

Despite Foreign Portfolio Investors (FPIs) selling stocks in August, experts predict a positive market opening next week due to favorable global cues and strong domestic economic data. Domestic institutional investors have been net buyers, balancing foreign outflows. Key indices ended the week with significant gains.

Despite the continued stock selling by Foreign Portfolio Investors (FPIs) in August so far, stock market experts have expressed a positive outlook for the market opening in the upcoming week.

According to market analysts, the positive forecast is driven by favorable global cues and domestic economic data, such as the HSBC India Manufacturing PMI and HSBC India Services PMI. The upcoming week is particularly significant due to FPIs selling net equities worth Rs 21,201 crore during August, including Rs 7,769.73 crore during the last week alone.

Ajay Bagga, Market and Banking expert, stated, 'For India, the one issue is continued FPI selling which has taken out nearly USD 2.8 billion from the cash equities segment this month so far. We remain positive on the Indian markets and expect a move up.'

In contrast to foreign investors, domestic institutional investors have emerged as net buyers, largely compensating for FPI outflows. According to NSE data, their net gross purchase in August stands at Rs 34,060.09 crore.

Benchmark indices had a strong rally, with the NSE Nifty 50 and the BSE Sensex posting significant gains. On Friday, the Sensex increased by 1,330.96 points to 80,436.85, while Nifty 50 soared by 397.40 points to 24,541.15.

Market analysts say that stock markets have responded impressively to global risks and will likely react positively next week due to favorable US economic indicators suggesting potential Federal Reserve rate cuts.

Among key sectoral indices, IT saw significant gains, followed by realty and auto, while energy and metal sectors ended in the red. The broader indices also managed to recover losses, with midcap gaining nearly a percent and smallcap finishing almost flat.

Ajit Mishra, SVP Research at Religare Broking Ltd., noted, 'With the earnings season concluded, attention will shift to global markets for cues, particularly given the recovery in US markets which has eased recession fears.' Domestically, participants will watch institutional flows and upcoming economic data for direction.