The Sensex ended at 61,560.64, down 371.83 points or 0.6% from the previous close. The Nifty declined 104.75 points or 0.57% to end at 18,181.75. Short covering in the later part of the day helped both the indices recoup some of their losses after falling nearly 1% earlier in the session.
“The US debt ceiling has serious implications and that is what’s causing all the noise in financial markets,” said Rakesh Arora, managing partner, Go India Advisors. “The negotiations have a very remote chance of failing, but if the US doesn’t succeed in raising the limit, things will look even more scary.”
On Wednesday, foreign portfolio investors (FPIs) were net buyers for the 15th straight session but the quantum of purchases was lower. Overseas funds net purchased shares in the cash segment worth Rs 149.33 crore while domestic institutions were net sellers to the tune of Rs 203.87 crore, according to provisional stock exchange data.
“FPI flows drove our markets higher in the recent sessions,” said Abhilash Pagaria, head, alternative and quantitative research, Nuvama Institutional Equities. “However, after a strong rally, we expect the up-move in frontline stocks to be capped around 18,450 levels.”
Pagaria said the Nifty has a support around 17,750-17,800 levels and will continue to trade in the range. “We see increased participation in the broader markets, and expect the Midcap and Smallcap stocks to outperform in near-to-medium term.”
Arora is optimistic on FPI inflows and expects the string of foreign fund’s equity purchases to continue for some more time. “At the start of 2023, China’s reopening was the real trade and FPI money went there. However, that trade has fizzled out and the money is now returning to India.” The NSE Midcap 150 index ended down 0.1% while the Smallcap 250 index advanced 0.4% and managed to eke out some gains. The market breadth was weak with only 794 stocks rising as against 1,114 shares that ended in the red.
