India’s equity markets are reeling under sustained FII selling pressure that shows no signs of abating. Market analysts unanimously predict continuation until bullish catalysts emerge.
Fresh data reveals FIIs net sold ₹16,700 crore across market segments last week. This extends their selling run to 21 consecutive sessions—the longest in nearly two years.
‘Foreign investors need clear positive signals across macro, micro, and technical parameters before reversing course,’ stated Ankit Gupta, Chief Investment Officer at Prosperity Asset Management.
The trigger list is familiar but stubborn: US 10-year Treasury yields hovering near 4.5%, strengthening dollar index, and binary risks from US elections and Middle East conflicts. India’s premium valuations relative to other emerging markets complete the bear case.
Domestic flows have provided a safety net, with DIIs absorbing ₹9,200 crore of supply. However, stretched domestic mutual fund valuations and peak SIP inflows limit their buying capacity going forward.
Breadth indicators flash red across the board. Advance-decline ratio has deteriorated to 1:3, with 70% of listed stocks trading below key moving averages. Mid and smallcaps have corrected 12-15% from recent peaks.
Key resistance levels to watch: Nifty 24,200 (20-day EMA) and Bank Nifty 50,500. A breakdown below Nifty 23,200 opens the door to 22,500, last August’s low.
Corporate India faces its moment of truth with Q3 earnings curtain-raiser this week. Consensus expects 8-10% earnings growth, but consensus misses could exacerbate the downtrend.
Strategic positioning calls for 20-30% cash allocation, with incremental buying confined to fundamentally strong names at 10-15% discounts to intrinsic value. Patience will be the winning virtue until FIIs spot their re-entry window.