Nifty, Sensex Extend Losses for Second Week Amid FII Selling, Global Concerns
Mumbai: Indian equity benchmarks extended their decline for the second consecutive week as persistent selling by foreign institutional investors (FIIs) outweighed signs of resilience in the domestic economy.
During the week, the Nifty fell 0.71% to close at 25,492, while the Sensex dropped 1.65% to settle at 83,216.
“Select sectors found support from strong Q2 earnings, with PSU banks staying in focus due to robust financial performance, improving asset quality, and renewed speculation about a potential FDI cap hike and sector consolidation,” said Vinod Nair, Head of Research at Geojit Financial Services.
Analysts said a buy-on-dips approach remains advisable, as most Nifty 50 companies have reported results largely in line with expectations. Continued policy support is likely to sustain premium valuations and may even lead to earnings upgrades, they added.
However, with FY25 earnings growth expected to slow to around 5%, valuations have become stretched, making India one of the most expensive markets globally. This has prompted FIIs to shift funds to cheaper emerging and developed markets, analysts noted.
Currently, the Nifty trades above 20x FY27 estimated earnings, slightly higher than its 10-year average P/E ratio. Despite elevated valuations, experts believe India’s strong long-term growth prospects justify the premium.
Technically, support for the Nifty is seen near the 25,400 zone, while resistance lies around 25,600.
Meanwhile, indicators of robust economic growth and earnings recovery continue to emerge, which could eventually encourage FIIs to slow their selling and return as buyers.
In the coming week, market movement will likely hinge on domestic inflation data, FII flow trends, potential developments regarding the US government shutdown, and trade talks involving the US, India, and China.
