Global Trends That Will Shape Stock Markets: Analysts Rate FII Trading Activity

Last Update:17 November 2024 15:21 IST

Trading activities of foreign investors and global trends will be the main driving factors for stock markets.

Last week, BSE benchmark index Sensex fell by 1,906.01 points or 2.39 percent. (Representative image)

According to analysts, the next week, which will be shortened due to the holiday, the trading activities of foreign investors and global trends will be the most important driving factors for stock markets.

Trade Holiday for Maharashtra Assembly Elections

Leading stock exchanges BSE and NSE declared trading holiday on November 20 due to assembly elections in Maharashtra.

Election Calendar

Elections for the 288-member state legislature will be held on November 20 and votes will be counted on November 23.

The Effect of Elections and Global Indicators on Markets

“The Indian stock market will remain closed on Wednesday, November 20, due to the Maharashtra assembly elections. The election results will be important in shaping the market’s direction, along with key global economic indicators including US bond yields, dollar index performance, US unemployment claims, flash manufacturing and services PMI data and Japan’s inflation data.

FII Activity and Emerging Market Dynamics

“High US bond yields and post-election strengthening dollar have impacted emerging markets like India, and FII (Foreign Institutional Investors) activity remains a key factor impacting Indian equities in the near term,” said Pravesh Gour, Senior Technical Analyst at Swastika Investmart. Ltd. he said.

Other Important People Influencing the Market

Experts said the movement of global oil benchmark Brent crude oil and the rupee-dollar trend will also affect trading in the market.

Shortened Trading Week and Focus on FII Flows

“This week has also been shortened by the holidays and with earnings season largely over, attention will shift back to FII flows. Foreign institutional investors have been on a steady selling spree for the last month and a half. Ajit Mishra, Senior Vice President, Research, Religare Broking Ltd, also said that investors will closely follow global market trends.

Latest Market Performance

Last week, BSE benchmark index Sensex fell by 1,906.01 points or 2.39 percent.

Stock markets were closed on Friday for Guru Nanak Jayanti.

Decline from Record Levels

The BSE index fell a whopping 8,397.94 points or 9.76 percent from its all-time high and Nifty also lost 2,744.65 points or 10.44 percent from its record high.

While Sensex reached its record high of 85,978.25 on September 27 this year, NSE Nifty also reached its record high of 26,277.35 on the same day.

Factors Behind Market Volatility

The sharp decline in benchmark indices was triggered by foreign investors fleeing the domestic market, weak second-quarter earnings and high valuations of stocks.

Siddhartha Khemka, Head of Research, Asset Management, Motilal Oswal Financial Services Ltd, said markets remain volatile due to weak Q2 results, rising dollar index and ongoing FII sell-off in the last one and a half months.

FPIs’ Sales Spree Continues

Foreign investors have withdrawn Rs 22,420 billion from the Indian equity market so far this month due to higher domestic equity valuations, increased allocations to China and rising US dollar and Treasury yields.

With this sale, Foreign Portfolio Investors (FPIs) have recorded a total outflow of Rs 15.827 billion so far in 2024.

According to data, FPIs have recorded a net outflow of 22,420 billion rupees so far this month. This follows a net withdrawal of Rs 94.017 billion in October, the worst monthly outflow.

Before this, FPIs had withdrawn Rs 61,973 crore from equities in March 2020.

In September 2024, foreign investors invested 57.724 billion rupees, the highest in nine months.

Eight Out of the 10 Most Valuable Companies Received Rs 1.65 Lakh Cr in Mcap

Eight of the 10 most valuable firms lost Rs 1,65,180.04 crore last week on holiday-shortened market valuation; HDFC Bank and State Bank of India were hit the hardest, in line with the weak trend in stocks.

HDFC Bank’s valuation increased from 46,729.51 billion rupees to 12,94,025.23 billion rupees.

The market valuation of State Bank decreased by 34,984.51 billion rupees to 7,17,584.07 billion rupees.

Reliance Industries remained the most valuable domestic firm, followed by TCS, HDFC Bank, ICICI Bank, Bharti Airtel, Infosys, State Bank of India, ITC, LIC and Hindustan Unilever.

(With agency input)