Indian shares fall as foreign outflows persist

BENGALURU: Indian shares ended lower in a volatile session on Monday, weighed down by continued foreign investor selling and higher oil prices, which offset healthy earnings from HDFC Bank.

The Nifty 50 index closed 0.34% lower at 17,894.85, while the S&P BSE Sensex fell 0.28% to 60,092.97. Both benchmarks had risen more than 0.5% earlier in the session.

Ten of the 13 major sectoral indexes declined, with heavyweight financials falling 0.75% and metals losing 1.32%.

The reversal in the broader market almost mirrored the downturn in financials, which surrendered intraday gains, as did HDFC Bank despite a better-than-expected quarterly report. The stock of the country’s largest private lender closed nearly 1% lower.

The broader weakness was due to foreign selling in Indian equities given their high valuations relative to markets such as China and Taiwan, where allocations were lowered earlier due to COVID curbs, three analysts said.

“The volatility in the markets will continue in the near term due to extended selling by foreign portfolio investors (FPI),” said Siddhartha Khemka, head of research (retail) at Motilal Oswal Financial Services.

Data showed FPIs have sold 150.68 billion rupees ($1.85 billion) worth of equities so far this year.

Foreign institutional investors (FIIs) have been net sellers for the last sixteen sessions in a row – the longest such streak in six months, according to exchange data – offloading nearly 239 billion rupees worth of securities since Dec. 23.

Analysts also flagged a moderation in domestic investors’ buying as another reason for volatility.

Meanwhile, oil prices held near 2023 highs on optimism that China’s reopening will lift demand. High crude prices hurt big importers like India as it adds inflation pressure.

Among stocks, Avenue Supermarts slid nearly 5% after reporting a drop in core profit margins in the third quarter due to weak demand.

Maruti Suzuki fell over 1% after the country’s No.1 carmaker raised prices by an average of 1.1% across its models.