Mumbai, June 28 (IANS). The sentiment in the Indian stock market has improved due to reduced selling pressure due to fall in crude oil prices and selective buying by foreign institutional investors (FIIs). This information was given by analysts.
During the last nine trading days (June 15 – June 25), FIIs bought in the cash market on five days, although these purchases were in limited quantities. Due to this, the continuous heavy selling by foreign investors seems to be ending now.
Dr. V.K., Chief Investment Strategist, Geojit Investments Limited. “Two things are responsible for this change in foreign portfolio investors (FPI) activities. First, the rupee has stabilized and has also strengthened from a low of 96.96 against the dollar on May 15. Now the rupee is at around 94.40 against the dollar,” Vijayakumar said.
When the rupee is strengthening, it is not wise for FPIs to sell.
Secondly, huge volatility in South Korean and Taiwanese markets is forcing FPIs to sell in these markets.
“One day the South Korean market fell 8 per cent, forcing trading to be halted. This is leading to FPIs making huge profits selling in South Korea and Taiwan. This is prompting FIIs to consider reinvesting in India despite lower earnings,” he said.
At the same time, falling of crude oil prices below $73 per barrel is a very good thing for India.
The ‘Balance of Payments’ crisis that India was facing is now over. For this reason, it can be said with certainty that the period of continuous FPI selling is over. However, analysts say it may take some time for FPIs to become consistent buyers in India.
Expectations regarding a possible trade agreement between India and America also boosted investor confidence, while the return of purchases by select FIIs after intermittent withdrawals boosted market confidence.
Ajit Mishra, Research SVP, Religare Broking Ltd, said that due to sluggishness in macroeconomic indicators and uncertainty over global monetary policy, there is a need to adopt a disciplined and stock specific approach to investment.
He further said that globally, crude oil price trend, volatility in West Asia and FII investment trend will remain the main factors determining the market sentiment. The progress on the possible trade agreement between India and America will also be closely monitored.
–IANS
abs