India's benchmark Nifty 50 index concluded the November futures and options (F&O) series with a marginal decline of 0.20%, as persistent selling by foreign investors and unresolved questions surrounding a potential India-US trade agreement counteracted the positive influence of stable second-quarter corporate results and reasonable large-cap stock valuations.
What Drove Market Sentiment in November?
The domestic market mood had initially been bolstered by encouraging Q2 earnings and the possibility of a landmark trade deal with the United States. On a monthly basis, the Nifty 50 has still managed to secure a gain of over one percent in November, positioning itself for a third straight month of advances.
However, this upward momentum faced significant headwinds. The relentless selling by Foreign Institutional Investors (FIIs) continued unabated, even as Domestic Institutional Investors (DIIs) remained net buyers. This dynamic, combined with the lingering cloud of US tariff concerns and a lack of clarity on the trade deal timeline, effectively flattened the market's trajectory throughout the November derivatives series.
Analysts point out that the premium valuations of Indian equities have made other emerging markets appear more attractive, triggering a strong sell-off by foreign funds this year. Another critical factor squeezing the market has been a drain on retail liquidity caused by a deluge of Initial Public Offerings (IPOs).
The IPO Frenzy and Its Market Impact
G Chokkalingam, Founder and Head of Research at Equinomics Research Private Limited, explained the situation. He noted that retail investors, who dominate the market both directly and through mutual fund investments, have seen their liquidity tighten. The frenzy for IPOs has redirected funds that would typically flow into the secondary market.
"IPOs have absorbed nearly ₹1.5 lakh crore, draining funds that would have otherwise gone into the secondary market," Chokkalingam stated. He added that a significant number of investors shifted to becoming short-term traders aiming for quick listing gains, but many of these IPOs later corrected, trapping their capital.
Furthermore, the Indian market's recent underperformance is also attributed to the absence of major global players in the artificial intelligence (AI) sector. This year's global stock rally has been largely powered by technology companies capitalizing on the AI boom, a trend from which Indian markets have been mostly excluded.
Top Performers and Laggards of the November Series
Biggest Losers: The November F&O series was particularly harsh on several key stocks. Tata Motors PV led the decliners with a sharp 14% fall. It was followed by Trent and Eicher Motors, which saw declines of up to 10%. Stocks of Bajaj Finance, Grasim, and Tata Steel each dropped over 8%, while Apollo Hospitals and Hindalco fell by 7%. Shares of JSW Steel declined 6%, and NTPC, Power Grid, Bajaj Finserv, and Coal India each lost 5%.
Notable Gainers: On the winning side, Shriram Finance emerged as the top performer, surging an impressive 16%. Asian Paints followed closely with a 15% rise. Other significant gainers included Adani Ports, SBI Life Insurance, HCL Technologies, Sun Pharma, and the State Bank of India (SBI), all of which posted gains between 5% and 6% during the series.
Despite hitting a 52-week peak of 26,246.65 during the November series, the Nifty 50 index could not sustain that altitude. It finally settled at 25,884.80 on the expiry day, Tuesday, November 25, reflecting the cautious and complex sentiment that defined the month's trading.
