Foreign fund outflows persist while domestic investors buy back

On July 21, the Indian equity market opened with little movement. The Sensex slipped 58 points to 77,649 and the Nifty fell 22 points to 24,216, both within a narrow range.

Sector indices painted a mixed picture. Gains were logged in PSU banks, metals, commodities, power, energy, infra and oil & gas, whereas defence, consumer durables, pharma, media, health‑care and realty indices moved lower.

The breadth of the rally was evident in the mid‑cap and small‑cap corners. The Nifty Midcap 100 rose 140 points (0.22%) to 62,945, while the Nifty Smallcap 100 climbed 71 points (0.38%) to 19,399.

In the Sensex collection, strong performers were Tech Mahindra, ICICI Bank, UltraTech Cement, Indigo, SBI, Tata Steel, Bharti Airtel, Bajaj Finserv, Asian Paints, ITC, Hindustan Unilever, BEL and L&T Technologies. Stocks such as HDFC Bank, Eternal, Sun Pharma, Maruti Suzuki, M&M and Axis Bank lagged.

Asian equity markets largely posted gains, with Tokyo, Shanghai, Jakarta and Seoul in the green, while Bangkok and Hong Kong slipped.

US markets closed lower on Monday; the Dow Jones dropped 0.59% and the Nasdaq edged down 0.05%.

Foreign Institutional Investors (FIIs) continued to sell, exiting INR 1,121.04 crore in equities on Monday. In contrast, Domestic Institutional Investors (DIIs) stepped in, investing INR 1,312.03 crore, providing net positive inflows.

Experts say the market is still watching first‑quarter earnings and the Iran‑U.S. geopolitical saga. Any new development could shift sentiment dramatically. The recent FII buying at the start of July may be eroded by the current sell‑off, adding to downward pressure.

Despite the flat start, buying in mid‑cap and small‑cap spaces indicates that investors are looking for value opportunities while awaiting clearer macro signals.