Bears are likely to tighten their grip further on Tuesday, amid weak global sentiment. Gift Nifty at 23,480 indicates a flat to positive start for Nifty. However, according to analysts, the pain is in the broader market with most mid-cap and small-cap stocks falling like nine pins. Tariff threat from the new administration in the US and a relatively weak set of Q3 results by India Inc added to selling pressure, they said. The unabated selling by foreign portfolio investors is unlikely to end soon, they fear.
“BJP’s victory in the Delhi Assembly election was expected to bring some stability to market sentiment, but global concerns and foreign investor activity have overshadowed the impact. With the Budget now behind us and the RBI providing monetary relief, attention will shift back to the last leg of Q3 earnings, corporate guidance and global macros amid turbulence in global markets due to Trump’s trade policies,” said Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd.
The derivatives data reflects a bearish undertone, as call sellers maintain dominance over put writers, said Dhupesh Dhameja, Derivatives Analyst, SAMCO Securities “New call writing across 23,400–23,800 strikes further strengthens resistance, whereas put unwinding at lower strikes signals a bearish realignment. Meanwhile, the Put-Call Ratio (PCR) declined to 0.59 from 0.67, reflecting a gradual shift toward a bearish sentiment. The ‘Max Pain’ level at 23,500 suggests limited downside despite heightened volatility,” he said.
Given the market’s weak structure and lacklustre sentiment, a ‘Sell on Rise’ strategy appears favourable, he advised.
Despite a strong US closing, equities across Asia Pacific region are down in early trade on Tuesday, as Trump imposed fresh tariffs on aluminium products.
India dedicated funds have been pulling out since start of CY25, said Elara Securities.
Inflows into the US markets are slowing down after having played one large leg of dollar unwind trade since Oct’24 post Trump victory. US markets saw slowest weekly inflow by foreign funds since Oct’24 of $2.3 billion, it said adding that on the other hand, redemption pressure on most EM funds has been coming down since the past 2 weeks barring India.
India saw another large outflow of $570 millionn, taking total foreign fund redemption since Oct’24 to $5.7 billion, according to the domestic brokerage.
“Large part of pressure on India flows is now from dedicated funds, where outflows have started accelerating for the first time since 2021. The first leg of India outflows from Oct’24 to Dec’24 was largely due to pressure on GEM funds as allocations were moving back to the US. However, since the beginning of CY25, redemption pressure is strong on dedicated funds. Almost 70% of India outflows in CY25 are from dedicated funds,” it added