The recent fall in foreign fund outflows from domestic equity markets has reversed sentiment among investors, according to Ajay Srivastava, managing director, Dimensions Consulting Pvt. The selling from the foreign institutional investors impacted the markets, as fundamentals remained broadly unchanged, he explained. FII selling will likely remain a key factor to watch out for in the near term for market performance.
The recent fall in foreign fund outflows from domestic equity markets has reversed sentiment among investors, according to Ajay Srivastava, managing director, Dimensions Consulting Pvt. The selling from the foreign institutional investors impacted the markets, as fundamentals remained broadly unchanged, he explained. FII selling will likely remain a key factor to watch out for in the near term for market performance.
In January, foreign portfolio investors sold Rs 78,027 crore worth of equities and Rs 34,574 crore in February. In March so far, FPIs have sold Rs 31,719 crore worth of equities, according to data from National Securities Depository Ltd.
In two months to February, the NSE Nifty 50 declined 8.53%, in contrast to a 5.54% advance in March so far. In the week ended March 21, the Nifty 50 posted the best week in four years, as investors were able to look past negative factors existing in the global backdrop.
On Monday, the NSE Nifty 50 extended its gaining streak to the sixth consecutive session after scaling the highest level since Feb. 7. It was trading 1.11% higher at 23,609.05, as of 11:38 a.m.
India is naturally an optimistic market irrespective of fundamentals.Ajay Srivastava, managing director, Dimensions Consulting Pvt Ltd.
Good Time To Evaluate And Alter Portfolios
Srivastava suggested investors to rejoice in the recovery, but resist in turning euphoric. It's not the time to jump all in with a thought that a new bull-run has started, he said.
Investors may choose to evaluate and alter their portfolios. They should closely monitor where they are over-invested and under-invested. After the evaluation, they should trim or add stocks, Srivastava said.
Hospitals and selected non-banking financial companies are a good space to increase exposure, Srivastava said. Commodities look attractive from a long-term perspective. The simple reason is that rupee depreciation will increase the local price of the commodities which will keep investors on a safe side. The reason is stronger for basic commodities like copper, zinc, and aluminum, he said.
Markets are offering entry points which are lower than the levels at which private equity firms were buying, he said.
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