The Indian equity markets are displaying “structural resilience” despite facing significant global macro headwinds and outflows from foreign institutional investors (FIIs). For the week ending March 20, there was a notable risk-off sentiment among FIIs, leading to weekly net outflows amounting to Rs 29,718.9 crore. Despite this, the Nifty 50 index held firm, closing at 23,114.50 with a marginal increase of 0.49%, supported by domestic institutional investors (DIIs) making net purchases of Rs 30,269.23 crore.
Although the markets ended the week with a mostly flat performance and a negative bias, there was an underlying sense of caution among participants. The week started positively, but a sharp decline on Thursday wiped out gains, followed by a volatile final session. Consequently, the Nifty index slipped by 0.16% to end at 23,114.50, while the Sensex also saw a slight dip of 0.04% to settle at 74,532.96.
During the initial sessions, market sentiment was boosted by a partial resumption of vessel traffic through the Strait of Hormuz. However, escalating geopolitical tensions after Israel’s attack on Iran’s energy facilities pushed crude oil prices back up to around $119 per barrel. The rupee’s weakness against the US dollar, along with subdued global market cues, especially from the US, added further pressure, leading to continuous outflows from FIIs.
In light of the fragile market sentiment, persistent FII outflows, and ongoing global uncertainties, analysts recommend investors to adopt a cautious and selective approach. They suggest focusing on fundamentally strong large-cap stocks and sectors with stable earnings visibility. While Brent crude oil prices hover around $107 per barrel due to tensions in West Asia, the stabilization of the India VIX at 22.81 indicates a forming market base. Market observers anticipate a range-bound outlook between 22,800 and 23,300, with a positive bias contingent on global energy price stability and reduced currency volatility.
