Nifty, Sensex Fall For Second Week On FII Outflows; Weak Global Cues

Indian equity benchmarks fell for the second consecutive week as foreign institutional investors (FIIs) continued selling despite a strengthening domestic economy.

The Nifty dropped 0.71 per cent to close at 25,492, while the Sensex fell 1.65 per cent to 83,216.

Investors turned cautious amid fading expectations of a US Federal Reserve rate cut and mixed global cues. Weakness in the IT and metals sectors also contributed to the decline.

“Select sectors received support from strong Q2 earnings. PSU banks remained 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, Geojit Investments Limited.

Analysts advised a buy-on-dips strategy. Most Nifty 50 companies reported results in line with estimates.

Continued policy support is expected to maintain premium valuations and could drive earnings upgrades.

Earnings growth in FY25 slowed sharply to 5 per cent, stretching valuations and making the Indian market one of the most expensive globally.

As other emerging and some developed markets offered low valuations, FIIs sold Indian equities and moved funds to cheaper alternatives.

Nifty currently trades above 20 times FY27 estimated earnings, slightly above the 10-year average PE ratio.

Analysts said India’s superior long-term growth potential justifies current valuations, despite the stretched broader market.

Support for Nifty lies near 25,400, while resistance is around 25,600, they added.

Signs of robust economic growth and earnings recovery continue to emerge in India.

Analysts expect FIIs to reduce selling and turn buyers once leading indicators reinforce the growth trend.

Next week, the market direction will depend on upcoming domestic inflation data, FII flows, developments in the US government shutdown, and progress in trade negotiations involving the US, India, and China.

In summary, the market faces short-term pressure due to global uncertainty and FII outflows, but domestic fundamentals and strong corporate earnings offer underlying support.

Analysts advise investors to remain cautious yet look for selective opportunities in high-performing sectors.

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