The Indian equity markets are demonstrating ‘structural resilience’ despite intense global macro headwinds and foreign institutional investors (FII) outflows, according to analysts.
For the week ending March 20, a persistent risk-off sentiment among FIIs was observed, with weekly net outflows totaling Rs 29,718.9 crore.
This exodus, coupled with a surging US Dollar index, pressured the Indian rupee to a provisional record low of 93.71.
“Remarkably, the Nifty 50 maintained its integrity, closing at 23,114.50 (+0.49 per cent) as domestic institutional investors (DIIs) acted as a formidable counterforce with weekly net purchases of Rs 30,269.23 crore,” said Vinit Bolinjkar, Head of Research-Ventura.
Markets ended the week on a largely flat note with a negative bias, reflecting underlying caution among participants. The tone remained positive during the first three sessions; however, a sharp decline on Thursday erased the gains, followed by a volatile final session.
Consequently, Nifty declined 0.16 per cent to close at 23,114.50, while Sensex edged lower by 0.04 per cent to settle at 74,532.96.
During the initial sessions, sentiment was supported by partial resumption of vessel movement through the Strait of Hormuz.
“However, renewed geopolitical tensions following Israel’s attack on Iran’s energy infrastructure pushed crude oil prices back toward recent highs near USD 119 per barrel. Although prices moderated slightly thereafter, they remain elevated,” said Ajit Mishra–SVP, Research, Religare Broking Ltd.
Additionally, continued weakness in the rupee against the US dollar and subdued global market cues, particularly from the US, added to the pressure.
This was reflected in sustained FII outflows during the week.
Given the fragile sentiment, persistent FII outflows, and ongoing global uncertainties, investors should maintain a cautious and selective approach. Positioning should favour fundamentally strong large-cap stocks and sectors with stable earnings visibility, said analysts.
While Brent crude remains volatile near USD 107 per barrel due to West Asian tensions, the stabilisation of the India VIX at 22.81 suggests a market base is forming.
“We maintain a range-bound outlook between 22,800 and 23,300, with a positive bias contingent on the stabilisation of global energy prices and a cooling of the currency’s volatility,” said market observers.
