Kolkata: The downward trend in Indian stock market continues unabated. In the week beginning January 6, 2025, the benchmark indices have declined by a significant extent. While Sensex dived 2.32% (or 1,844 points), Nifty plunged by 2.38% (or 573 points). The sentiment in the market has been substantially attributed to the relentless outflow of FII (Foreign Institutional Investor) investment. Though there were other factors at play too.
Foreign investors have withdrawn Rs 22,194 crore from Indian equities so far in January 2025 and analysts point to a number of factors which is prompting the foreign investors to cut down their holdings of Indian equities. Some of the headwinds mentioned by analysts include apprehensions of a weak Q3 earnings season, the constant decline of the value of the Indian rupee in comparison to the US Dollar, uncertainty over interest rate cut by Reserve Bank of India (RBI), a possible tariff war with the US after Donald Trump takes charge this month, a slackening of GDP growth and still somewhat high retail inflation rates. FIIS have become so cautious in putting their money with Indian equities that their net buys of Rs 1.71 trillion in 2023 was down to just Rs 427 crore in 2024.
String of Q3 results this week
While TCS flagged off the Q3 financial results last week, this week a lot of heavyweights are supposed to announce their earnings for the October-December 2024 quarter. The list of companies includes Reliance Industries (RIL), Infosys, HCL Technologies, HDFC AMC, HDFC Life Insurance Company, and Axis Bank. The Q3 results could have some impact on the FII outflow, since analysts also indicate that some of the outflow is linked to the apprehension of not-very-encouraging Q3 earnings from the big companies.
December inflation data
“India’s CPI release on Monday will be a key factor,” Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd, was quoted by PTI as saying. This is another economic indicator that one has to look forward to. If the retail inflation for December is closer to the 4% level – the goal of RBI – the Monetary Policy Committee of the central bank which is supposed to meet on February 5-7, 2025. There is a clamour for trimming the Repo Rate which is at 6.5%. Going by official data released last week, the growth rate of industrial production rose to a 5.2%, a six-month high.
Prominent companies such as Infosys and Reliance Industries, HCL Technologies, HDFC AMC, HDFC Life Insurance Company and Axis Bank are set to announce their Q3 results this week. Also inflation data will be announced which could have an impact on rate cut possibilities. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
