Metal Stocks, FIIs Weigh in on the Sensex and Nifty Slump

Weak global cues, outflows of foreign funds, and a drop in metal stocks caused the Indian stock market indices, the Sensex and Nifty, to drop in early trading. FIIs sold Rs 3,560 crore worth of stocks on Thursday, as November retail inflation decreased to 5.48%.

Mumbai, Dec. 13 (PTI) – Metal stocks, foreign fund withdrawals, and negative global cues caused the benchmark indices, the Sensex and Nifty, to plummet in early Friday trading.

In early trading, the 30-share BSE benchmark Sensex fell 412.8 points to 80,877.16. At 24,418.85, the NSE Nifty fell 129.85 points.

Tata Steel, JSW Steel, IndusInd Bank, Axis Bank, Mahindra & Mahindra, Larsen & Toubro, State Bank of India, and Reliance Industries were the largest laggards within the 30-share Sensex blue-chip pack.

The winners were Hindustan Unilever, Nestle, Adani Ports, and Bharti Airtel.

According to exchange statistics, foreign institutional investors (FIIs) sold off stocks on Thursday for a total of Rs 3,560.01 crore.

Due mostly to falling food costs, retail inflation fell to 5.48 percent in November and fell below the Reserve Bank's comfort zone, allowing for a rate drop at the central bank's rate-setting panel meeting in February under new Governor Sanjay Malhotra.

In October and November of 2023, headline inflation based on the Consumer Price Index (CPI) was 6.21 percent and 5.55 percent, respectively.

According to official data released on Thursday, India's industrial production (IIP) growth fell to 3.5% year-over-year in October 2024, primarily as a result of subpar mining, electricity, and manufacturing performance.

"The market faces both headwinds and tailwinds in the foreseeable future. The restart of sales by FIIs, who yesterday sold stocks for Rs 3,560 crore, is the headwind. FIIs are expected to sell more at every market increase because to the high valuations in India.

"Declining inflation is the tailwind that can support the market," stated V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Seoul quoted higher as Tokyo, Shanghai, and Hong Kong traded lower on Asian markets.

On Thursday, Wall Street ended the day down.

"Market uncertainty has increased due to the Federal Reserve's impending interest rate decision on December 18. The market sentiment was further dampened by the heavy selling by FIIs, according to Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd.

Brent crude, a global oil benchmark, fell 0.04 percent to USD 73.38 a barrel.

On Thursday, the 30-share BSE benchmark fell 236.18 points, or 0.29 percent, to close at 81,289.96. At 24,548.70, the Nifty fell 93.10 points, or 0.38 percent.