Key Takeaways
- Indian shares closed lower on Wednesday, with the Nifty 50 and BSE Sensex falling.
- Oil prices rose to $106 per barrel, following incidents in the Strait of Hormuz.
- Foreign portfolio investors continued their selling streak, taking year-to-date outflows to a record $32.52 billion.
Indian stock markets closed lower on Wednesday, with the Nifty 50 index falling 0.44% to 22,622.70 and the BSE Sensex dipping 0.34% to 72,781.89. The broader small-caps and mid-caps also declined, falling 0.3% and 0.1%, respectively. Despite a rebound on Tuesday, with the Nifty and Sensex climbing about 1.6% each, the market sentiment was dampened by rising oil prices and sustained foreign outflows.
Oil prices surged to $106 per barrel after two vessels were struck in the Strait of Hormuz, raising concerns about supply disruptions. Iranian officials reported deploying new tactics to target ships, further exacerbating supply worries. Vinit Bolinjkar, head of research at Ventura, stated, 'Going forward, the direction of markets will depend on a combination of global risk appetite, currency movements, crude oil prices and corporate earnings momentum.'
Foreign portfolio investors extended their selling streak to 13 sessions on Tuesday, resulting in year-to-date outflows reaching a record $32.52 billion. Bolinjkar added, 'While domestic institutional participation remains the source of market resilience, that alone may not be sufficient to sustain a broad-based rally if foreign outflows persist.'
The information technology sector, which gained 5.2% in the previous session, added 1.1% on the day. Among individual stocks, Tata Elxsi climbed 5.7% after the engineering research and development firm posted higher quarterly profit. Conversely, Bank of Baroda fell 4% after UAE-based businessman BR Shetty, founder of NMC Healthcare, filed a $15 billion lawsuit against the state-owned lender and 25 other defendants in the Bombay High Court.
Investors are now awaiting key US inflation data due later in the day for clues on the Federal Reserve’s rate trajectory. Higher US interest rates tend to reduce the appeal of emerging markets such as India to overseas investors. Bolinjkar noted, 'Higher US rates tend to reduce the appeal of emerging markets such as India to overseas investors.'
The market's performance reflects the ongoing volatility and the interplay of various global factors, including geopolitical tensions, oil prices, and foreign investment flows. Analysts predict that the market may remain highly volatile and selective in the near term, with the direction of markets dependent on a combination of global risk appetite, currency movements, crude oil prices, and corporate earnings momentum.
Going forward, the direction of markets will depend on a combination of global risk appetite, currency movements, crude oil prices and corporate earnings momentum.
Vinit Bolinjkar, Head of research at Ventura
While domestic institutional participation remains the source of market resilience, that alone may not be sufficient to sustain a broad-based rally if foreign outflows persist.
Vinit Bolinjkar, Head of research at Ventura
