Indian Markets Play It Cool Amid FPI Outflows and Global Uncertainty

Indian stock markets opened with minimal movement as foreign portfolio investor outflows and global tensions persisted. Positive domestic indicators and easing India-China relations were overshadowed by bearish Asian trends and FPI actions. Market experts predict potential gains if these pressures reverse, especially during the upcoming festive season.

On Tuesday, Indian stock markets witnessed a subdued opening with the Nifty 50 index starting the day at 24,965.80, marking a minor drop of 14.85 points or 0.06 per cent. In contrast, the BSE Sensex showed a slight increase, beginning at 81,669.09, up by 24.70 points or 0.03 per cent.

Despite India's promising domestic factors such as monetary and fiscal stimulus, good monsoons, low inflation, and government-led consumption incentives, persistent foreign portfolio investor (FPI) outflows have weighed on the gains. Market analyst Ajay Bagga expressed optimism, predicting a rise in Indian markets alongside earnings growth, potentially by the next quarter as the festive season amplifies governmental economic measures.

Globally, easing tensions with China and positive indications from Chinese resource suppliers were anticipated to bolster investor confidence. Additionally, India's tactical moves to counter US-imposed tariffs on its key export sectors highlight ongoing efforts to strengthen trade relations. However, large FPI short positions continue to exert downward pressure, which could reverse in time, potentially enabling indices to ascend to record levels by year-end.

The market displayed mixed outcomes among various indices. While Nifty Auto experienced a marginal rise, other sectors such as FMCG, Pharma, Realty, and Oil & Gas saw declines. On the broader scene, Asian markets faced a slump, with Japan, Hong Kong, and South Korea witnessing significant index drops.

Vikram Kasat from PL Capital noted continued bullish trends on the Nifty in hourly trades, identifying immediate resistance and support zones that could determine future market dynamics. Meanwhile, a cautious outlook persists given the global market weaknesses and ongoing FPI movements.

(With inputs from agencies.)