Going Downhill Once Again

Amidst heavy selling by FIIs and a surge in retail inflation, the indices continued their decline with the sectors that previously attracted the highest foreign investments experiencing the most significant declines.

After a robust corporate earnings’ season, the Indian frontline indices witnessed consistent declines caused by foreign investors choosing to book profits subsequent to a significant market upswing. Amidst the ongoing scenario, FIIs maintained their position as net sellers, while DIIs transitioned to becoming net buyers. In the last 15 days, FII outflow totalled ₹ 8,081.37 crore while DII inflow reached ₹ 6,116.60 crore. Benchmark indices, the BSE Sensex and Nifty 50 recorded declines of 1.18 per cent and 1.06 per cent, respectively. In contrast, broader indices continued an uninterrupted rally, displaying a persistent sense of optimism.

The BSE Mid-Cap index marked a 0.34 per cent rise, while the BSE Small-Cap index stood out as the top performer, achieving gains of around 0.60 per cent. The majority of sectors have suffered losses over the last fortnight while the IT and power industries have remained resilient. BSE Information Technology took the lead as the top performer among the sectoral indices with prominent industry players Tech Mahindra and HCL Technologies experiencing notable gains in response to the optimistic outlook stemming from recent developments.

Ooredoo Group has chosen Tech Mahindra as its implementation partner for the company’s digital transformation. Meanwhile, HCL Technologies secured a significant contract valued at USD 2.1 billion from Verizon Business, focused on managed network services. A significant surge in power sector stocks propelled the BSE Power index to conclude the fortnight period with considerable gains. Shares of JSW Energy experienced an outstanding rally of over 23 per cent in the past two weeks, fuelled by the optimism stemming from the sizeable stake acquisition by the US-based boutique investment firm GQG Partners Emerging Market Fund.

Also, shares of Adani Power and Adani Energy Solutions witnessed gains of over 9 per cent each. The metals and mining as well as the banking and financial services sectors, which were the primary beneficiaries of the rally driven by substantial foreign investments, were grappling with significant selling pressures. Consequently, the BSE Metals index and BSE Bankex index registered declines of 2.92 per cent and 2.41 per cent, respectively, over the past two weeks.

Shares of Steel Authority of India experienced a sharp decline of more than 10 per cent, largely attributed to a weak quarterly performance marked by a 74 per cent year-on-year decline in net profit. In other updates, according to recently released government data, retail inflation exceeded the Reserve Bank of India’s acceptable range and surged to a 15-month peak of 7.44 per cent in July, primarily due to a rise in food prices. India’s industrial output growth hit a three-month low, standing at 3.7 per cent in June, affected by slow-paced expansion in manufacturing production and subdued external demand.