Indian equities were mostly unchanged thursday morning, as investors appeared to be hesitant to put more money into the markets in the short term. The stock indices have been hitting all-time highs and are currently at their highest levels.
At the time of writing, the benchmark Sensex and Nifty were both down 0.1%. Last week, the indices gained nearly 3% on average, the most in months, and reached new all-time highs. Notably, the Sensex reached 65,000 for the first time this week. The consistent inflow of foreign funds, firm economic outlook, and moderation in inflation supported Indian stocks recently.
Foreign portfolio investors (FPIs) have remained net buyers in Indian stock markets for the fourth straight month, according to data from the National Securities Depository (NSDL). FPIs bought Indian stocks worth Rs 7,936 crore, Rs 11,631 crore, Rs 43,838 crore, and Rs 47,148 crore in March, April, May, and June, respectively, data showed.
“An important trend in the market is the surge in retail investor participation as indicated by the sharp increase in new demat accounts ( 2.36 million) opened in June. New retail investors jumping on to the market bandwagon normally happens at the peak of a rally. This is a sign for caution,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “Two-wheeler sales in June indicate that demand continues to be a problem in rural areas. In brief, the macroeconomic scenario, though good, is not so bullish as to warrant continuation of the rally, which has already run a bit ahead of fundamentals.”
“Investors should not chase low-grade small-cap stocks at this juncture. Stay invested in high-quality large-caps. Wait for the Q1 results for direction.”
US stocks ended lower on Wednesday with the S&P 500 snapping a three-day winning streak after the minutes of the Federal Reserve’s last policy meeting showed almost all participants expected additional interest-rate increases. In its most recent meeting on wednesday, the US Federal Reserve’s monetary policy committee halted the key interest rate. The policy rate has been kept at 5.0-5.25 percent, which was close to zero following the outbreak of COVID-19.
With the exception of the recent hiatus, the US central bank has raised interest rates for the eleventh time in a row, as required in the fight against rising inflation.