📉 Foreign Selling Pressure on Stock Market; War and High Crude Prices Fuel Concerns
The Indian stock market remains under continuous pressure, as a succession of negative global and domestic factors heightens investor anxiety. Selling by Foreign Institutional Investors (FIIs) persists, driven by a slowdown in corporate earnings growth and elevated valuations. Furthermore, "Trump tariffs," tensions involving the US, Israel, and Iran, along with a surge in crude oil and gas prices, have rendered the market environment even more challenging.
So far in March, Foreign Portfolio Investors (FPIs) have engaged in massive selling worth ₹88,180 crore—the second-highest figure recorded since October 2024. Although Domestic Institutional Investors (DIIs) have attempted to shore up the market by purchasing assets worth ₹30,641 crore, the rally has failed to sustain itself due to a dearth of positive news.
Last week, foreign investors sold equities worth ₹29,897 crore in the cash market; however, their buying of index futures worth ₹4,094 crore suggests that they are beginning to view current market levels as attractive. Consequently, the market is currently exhibiting some resilience at these levels.
Technically, the Nifty remains weak, trading below its 200-day moving average of 24,784. Nevertheless, the Nifty's PE ratio dropping to the 20.53 level makes it appear attractive from a valuation perspective. Currently, the market is attempting to strike a balance between technical weakness and improved valuations.
Crude oil prices, after peaking at $119 per barrel, have retreated to hover around the $106 mark. India could find some relief if supply flows through the Strait of Hormuz remain uninterrupted. However, a hike of up to ₹22 in diesel prices has begun to intensify inflationary pressures.
Weakness persists in global markets as well—the Dow Jones recorded a decline of 981 points last week. The Dollar Index holding steady at 99.46 and bond yields remaining at 4.39% serve as negative signals for the equity market. The Rupee, too, continues to face pressure against the Dollar.
What Should Investors Do?
Given the current circumstances, investors need to remain cautious. It may be prudent to adopt a phased investment strategy—specifically, "buying on dips"—during market downturns. If global tensions subside, a sharp rebound in the market is possible; conversely, should negative news persist, the risk of a decline will remain.
Overall, the market is currently navigating a phase of uncertainty, where patience and the right strategy will prove to be investors' greatest strengths.
✍️ Shashank Bhardwaj
Senior VP, Choice Broking
