Markets ended a busy week with losses as foreign portfolio investors (FPIs) continued to pull out money from Indian equities.
Nifty and Sensex fell 0.6% and 0.3%, respectively, during the week.
With this, key indices have posted negative returns in five of the last six weeks.
FPIs have been at the forefront of this selling as they have withdrawn a massive Rs 1.14 lakh crore ($13.6 billion) in this period.
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Tactical fund flows shifting to China due to stimulus measures, slowing economic and earnings growth, geopolitical risks, and strengthening dollar have all led to the aggressive sell-off, which only got exacerbated by high valuations, as per experts.
On Friday, Nifty ended 0.2% lower at 24,148.20 points, and the Sensex fell 0.1% to 79,486.32 points.
Donald Trump’s victory in the US election is seen strengthening the dollar, which can further encourage FPIs to pull out of emerging markets, as per experts.
On the other hand, any cuts in corporate tax rate in the US is likely to aid information technology and pharmaceutical companies.
Not surprisingly, the Nifty IT index was the biggest sectoral gainer this week with 4% gains.
The next best performer was the Nifty PSU Bank index with 1% rise.
As per Kotak Institutional Equities, “Corporate tax cuts in the US may result in higher earnings and spending on IT services but will also result in higher fiscal deficits (if unfunded) and dollar weakness in the medium term.”
Among the worst hit sectors this week were real estate, media, energy, and fast moving consumer goods. These sectoral indices fell 1.8-4.1% during the week.
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“Q2FY25 earnings so far have made investors jittery and we have seen stocks of companies reporting weak earnings or weak outlook correcting,” brokerage firm JM Financial said. It said that 44% companies under its coverage that have so far reported earnings have missed expectations, while 41% have topped estimates.
Krishna Appala, senior research analyst at Capitalmind Research said the continued selling pressure is helping valuations cool-off,
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