The Indian stock market began the new week with slight gains, continuing the upward trend from the previous week. Investors are keeping an eye on the release of retail inflation data for January later today.
At 9:17 am, shortly after the stock market opened, the benchmark Sensex stood at 71,628.55, showing a gain of 33.05 points or 0.046 per cent. The Nifty was at 21,811.75, up 29 points or 0.1 per cent. Of the Nifty 50 companies, 26 were up while 24 were down at the time of reporting.
The ongoing sale of Indian stocks by foreign portfolio investors, along with elevated stock valuations, is causing worry for investors.
Foreign portfolio investors have been actively offloading Indian stocks, becoming net sellers in the Indian equity market in 2024. This comes after a rush to acquire domestic stocks in November and December. Following the sale of stocks worth Rs 25,744 crore in January, they have continued to sell, with Rs 3,075 crore sold in February.
"A reversal of the FPI selling in equity will happen when the US bond yields drift down and stay there for long," said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
In December 2023, retail inflation in India increased significantly, primarily driven by a surge in the prices of cereals, products, and eggs, marking the sharpest rise in four months. However, the sub-index for vegetables, meat, and fish experienced a notable decrease.
Retail inflation in India is within the RBI's 2-6 per cent comfort range, but it exceeds the optimal 4 per cent situation.
Retail inflation in India is projected to remain relatively stable in the January-March 2024 quarter, with SBI Research previously anticipating a decrease to 5.0 per cent by March 2024.
"The rebound in the banking majors has eased some pressure but it is too early to say that we are out of the woods. Traders should continue with a cautious approach, especially in the midcap and smallcap space and prefer a hedged approach," said Ajit Mishra, SVP - Technical Research, Religare Broking Ltd.