Indian stock markets opened on a flat note on Monday, reflecting ongoing volatility despite continued foreign institutional investor (FII) inflows. The Nifty 50 index began the day at 25,026.20, recording a modest gain of 6.40 points or 0.03 per cent, while the BSE Sensex started lower at 82,279.49, down by 51.10 points or 0.06 per cent.
Market experts attributed the cautious sentiment to increased short positions taken by foreign investors in the derivatives segment during the last trading session. This move has raised concerns about continued market volatility in the coming days.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that while FII inflows have been a significant factor in the ongoing market rally, other trends point to potential turbulence.
“The prime mover of the ongoing rally in the Indian market is the sustained FII inflows of around ₹23,800 crore so far this month. An apparently perplexing trend from the last trading day is that the market declined despite ₹14,018 crore of institutional buying (FIIs plus DIIs). This indicates that FIIs are increasing their short positions in the derivatives market. So expect more volatility ahead,” he said.
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Vijayakumar also highlighted the sharp rally in defence stocks as a significant market development. “An important trend in the market is the sharp rally in defence stocks. Even though this segment has bright medium to long-term prospects, their valuations have become excessive and, therefore, investors have to be extremely cautious. Some profit booking in this segment would be appropriate,” he added.
Sector-wise, most indices were trading in positive territory at the time of filing this report. Nifty Auto saw a healthy rise of 0.55 per cent, while Nifty Pharma gained 0.49 per cent. Nifty FMCG was largely unchanged, with a marginal gain of 0.02 per cent. However, Nifty IT was the only major sector in the red.
In broader Asian markets, sentiment remained weak. Japan’s Nikkei 225 index declined by 0.36 per cent, Hong Kong’s Hang Seng index fell by 0.38 per cent, and Taiwan’s Weighted Index slipped by 0.54 per cent. South Korea’s KOSPI experienced a sharper fall, dropping by more than 1 per cent in early trade.
Overall, mixed global cues and increased short positions by foreign investors have kept traders on edge as they assess the market outlook.
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