Foreign institutional investors (FII) selling Indian equities to book profits here and redirect funds into the Chinese markets was one of the primary reasons for the decline in Indian equities.
Other factors, including geo-political one, Securities and Exchange Board of India’s (SEBI) new norms for trading in Future & Options (F&O) segment, along with October month’s seasonality also played a key role, according to market analysts.
At 11:13 AM, the BSE SmallCap index, the top loser among broader indices, tanked 3.3 per cent. In comparison, the BSE MidCap index had slipped 2 per cent and BSE Sensex was down 0.5 per cent.
A total of 32 stocks from the BSE Smallcap index had locked in lower circuit and no buyers were seen on these counters. Geojit Financial Services (Rs 134.15) and IIFL Securities (Rs 357.35) were locked in 10 per cent lower circuit on the BSE in intra-day trade.
PC Jeweller (Rs 150.90), Mahanagar Telephone Nigam Limited (Rs 52.14), Kitex Garments (Rs 502.30), 63 Moons Technologies (Rs 369.40), Genus Power Infrastructures (Rs 362.65), Refex Industries (Rs 516.65), Solara Active Pharma Sciences (Rs 727.60) and Suraj Estates Developers (Rs 712.30) were among stocks locked in 5 per cent lower circuit on the BSE.
In comparison, the BSE Smallcap index has rallied 27 per cent during the same period.
In a sudden U-turn in FII strategy, FIIs turned massive sellers in the Indian market in October. During the three trading days in the month, FIIs have sold equity worth Rs 30,718 crore in the cash market, according to provisional data. The selling has been mainly triggered by the outperformance of Chinese stocks.
“This correction is an opportunity for long-term investors since the valuations of these stocks are fair and prospects look good. DIIs flush with funds will continue to buy the beaten down quality stocks,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Meanwhile, Amit Goel, co-founder and chief global strategist of Pace 360, believes the worst of the geo-political impact and China-related issues is now behind us.
“We began purchasing equities in a significant way yesterday and will continue to do so in the coming days. In the short term, we are positive about the markets. However, longer term, we remain cautious due to deteriorating global macroeconomic conditions and high valuations,” Goel said.
First Published: Oct 07 2024 | 12:08 PM IST
