Heavy FII selling, derivatives expiry torpedo relief rally
Subscribe to enjoy similar stories. The relief rally fizzled out sooner than expected. The heaviest selling by foreign investors in more than three weeks, amid rising US bond yields and a strengthening dollar, brought the markets crashing more than 1.5% on Thursday, leaving investors poorer by ₹1.55 trillion.
The expiry of Nifty monthly option contracts on Thursday also pulled down sentiment. Thursday’s fall put an end to a rally that saw benchmark indices NSE Nifty and BSE Sensex gain 1,100 and 3,700 points, respectively, from their lows a week ago. Last Thursday, the Nifty and Sensex had tumbled 3,014 and 9,176 points from their respective record highs on 27 September to lows of 23,263.15 and 76,802.73.
The profit booking by foreign institutional investors (FIIs) saw them net sell shares worth ₹11,756.25 crore, according to data from BSE. The selling comes on the heels of record monthly outflows of ₹94,017 crore in October. Inflows of ₹8,718.30 crore by domestic institutional investors (DIIs) on Thursday were inadequate to stop the slide.
The outflows singed not only stocks, but also dragged the rupee down to a record low of ₹84.5075 before it settled at ₹84.4962, per Bloomberg data. Experts, though, predicted that the market is likely to trade rangebound going forward, with a downward bias in the absence of fresh triggers. On Thursday, the Nifty and Sensex gave up key psychological supports of 24,000 and 80,000.
The 50-share Nifty fell 1.49% to settle at 23,914.15 while the Sensex tumbled 1.48% to 79,043.74. The fall came on a day of monthly Nifty derivatives expiry, which at times results in higher volatility. The Nifty options and futures expire on the last Thursday of a month.
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