Markets Rebound as Foreign Funds Return to Indian Equities
Indian equities staged a strong intraday recovery on Wednesday, overcoming a weak start driven by mixed global signals and cautious Asian sentiment. Early trading saw the Sensex dip 64.74 points to 76,853.11, while the Nifty fell 68.60 points to 23,742.25. Global anxiety over rising artificial intelligence spending weighed on tech shares across borders, creating a mixed external environment. However, domestic buying intensity soon overwhelmed the initial sell-off, lifting the Sensex by 478.18 points to a session high of 77,396.04. The Nifty mirrored this momentum, gaining 135.5 points to settle near 23,846.35 at its peak.
The market’s resilience was partly due to a favorable rotation between sectors. Indices tracking consumer goods, realty, and IT underperformed, recording drops of up to 0.79 percent. Financials, energy, and metals also joined the decline. Conversely, the healthcare and pharmaceutical complex emerged as a vital support system, with key healthcare indices advancing by roughly 0.23 percent.
The driving force behind the market’s upturn is a noticeable shift in foreign portfolio investment. After a prolonged period of outflows spanning two years, foreign institutional investors have resumed accumulation. Over the preceding six sessions, foreign funds demonstrated a net buying presence in five, injecting ₹18,661 crore into the market. Tuesday’s session alone recorded a net purchase of ₹6,836 crore, breaking a trend of sustained selling. In contrast, domestic institutional investors continued their liquidation spree, offloading ₹3,678 crore of equity on the third consecutive day. Financial strategists attribute this foreign return to a cooling in global AI-themed capital outlays, combined with compelling large-cap valuations and robust quarterly corporate results.
On the technical front, the market structure remains constructive. The Nifty is sustaining its position above the 50-day EMA at 23,196, while the RSI reads 66.59, a level that underscores prevailing strength. Market participants are advised to monitor the 23,500 to 23,600 zone for defensive support. Resistance is anticipated between 24,000 and 24,200, with the 200-day EMA around 23,904 acting as a crucial pivot. Large-cap financial stocks are poised to guide the rally, aided by short-covering mechanisms.
Overseas, Wall Street wrapped up Tuesday’s session on a positive note, with the Nasdaq benefiting from renewed buying in mega-cap technology and AI companies. Stock-specific moves continued to generate noise, highlighted by a slide in Apple’s shares following a lackluster earnings release. While experts credit the current uptrend to steadfast foreign inflows, resilient corporate earnings, and a sturdy domestic economic backdrop, they warn that near-term volatility may persist. Investors should anticipate potential profit-booking and navigate fluctuations stemming from shifting global technology valuations.