Indian equity benchmarks witnessed a weak start to Tuesday's trading session, mirroring negative global trends. Both the Nifty50 and the BSE Sensex opened in the red, extending losses from the previous session as investors turned cautious.
Market Opening: A Deep Dive into the Numbers
At the opening bell, the benchmark indices faced significant selling pressure. The Nifty50 index slipped below the crucial 26,000 psychological mark, trading at 25,931.70 by 9:16 AM, marking a decline of 96 points or 0.37%. Simultaneously, the BSE Sensex was down by 323 points or 0.38%, standing at 84,890.83. This bearish opening was primarily attributed to weak cues from global markets and persistent foreign fund outflows.
Expert View: Consolidation and Key Support Factors
Market analysts suggest the indices are entering a phase of consolidation with heightened volatility, a typical year-end phenomenon characterized by thinner trading volumes. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, provided a nuanced perspective. He noted that while sustained selling by Foreign Institutional Investors (FIIs) is ongoing, it is being comfortably absorbed by robust buying from Domestic Institutional Investors (DIIs).
He highlighted improving economic fundamentals as a key support. A major positive is the sharp reduction in India's trade deficit to $24.53 billion in November from $41.64 billion in October. This, according to Dr. Vijayakumar, is likely to stabilize the Indian Rupee, reducing pressure on FIIs to sell in anticipation of further currency depreciation.
Looking ahead, he pointed to a potential shift in global capital flows. "The weakening of the AI trade continues in the US. Chances are that at some point in 2026, AI trade will weaken significantly facilitating capital flows into EMs like India," he stated. However, he emphasized that for a sustained market rally, a clear earnings recovery is essential, with the upcoming Q3 corporate results being a critical indicator. He maintained a strong outlook for the Bank Nifty index.
The Global and Domestic Triggers
The negative sentiment was imported from international markets. US markets ended lower on Monday as investors awaited key economic data and Federal Reserve commentary for clues on future interest rate paths. Following suit, Asian shares also edged lower in early trade.
In other asset classes, oil prices extended their decline on hopes of peace talks in the Russia-Ukraine conflict, while gold prices edged higher on expectations of US rate cuts. Silver held near its recent highs.
The institutional flow data underscored the ongoing trend. On Monday, Foreign Portfolio Investors (FPIs) were net sellers to the tune of Rs 1,468 crore. In contrast, Domestic Institutional Investors (DIIs) provided support with net purchases of Rs 1,792 crore, cushioning the market fall.
As the year draws to a close, market participants are bracing for a range-bound but volatile trading environment, with global economic uncertainties and domestic institutional activity acting as the primary drivers in the near term.
