Stocks extend losses as FPIs continue the selling spree
MUMBAI : Benchmark indices closed in the red for the third straight session on selling by foreign portfolio investors (FPIs), despite global brokerage Morgan Stanley upgrading India’s sovereign rating to overweight, citing economic resilience. However, domestic funds’ buying in the last 45 minutes of trading contained the losses by the day’s end. The FPI selling, in the wake of a Fitch Ratings’ downgrade of US credit ratings on Tuesday, contributed to the rupee weakening to 82.73 to the dollar.
Both Nifty and Sensex plunged as much as 1.2% to their intraday lows before paring their losses to end 0.7 -0.8% lower each at 19,381.65 and 65,240.68. Late buying by domestic institutional investors (DIIs) worth a provisional ₹1,729.19 crore cushioned the day’s losses, with FPIs selling stocks worth ₹317 and Nifty and Bank Nifty futures contracts worth ₹3,442 crore. In a rare occurrence, they also turned net cumulative sellers in stock futures of 8,851 contracts.
This indicates further volatility ahead. Significant shorts have been formed in Nifty futures, with open interest of active futures contracts rising 10%. Investors saw ₹96,206 crore of their wealth being eroded in Thursday’s fall.
Analysts said the FPI sentiment had turned risk-off for now with a flight of safety to the dollar and US bonds. Turnover on the National Stock Exchange (NSE) spurted to ₹83,145 crore, up from an average daily turnover of around ₹73,000 crore last month, led by Vedanta Ltd contributing ₹5,829 crore on the selling of shares by the promoter, HDFC Bank Ltd ( ₹4,709 crore) and ICICI Bank Ltd ( ₹3,002 crore). “Domestic markets continued to witness downward pressure as investor sentiment turned sour in the wake of Fitch Ratings’ decision to downgrade
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