Foreign institutional investors (FIIs) made a notable shift in their stance on Thursday, August 24, as they put an end to their selling streak. A combination of factors, including lower US bond yields and positive global cues, influenced this change in sentiment. The US market displayed a positive trend, driven by declining US PMI figures that sparked hopes of an extended rate pause, thereby calming US bond yields. Concurrently, domestic institutional investors (DIIs) continued their net buying trend, injecting ₹5,797 crore into the market during the session.
A Change in Direction
According to data from the NSE, FIIs collectively purchased ₹12,992.74 crore worth of Indian equities, while simultaneously selling ₹11,467.87 crore, culminating in a net inflow of ₹1,524.87 crore. DIIs, on the other hand, infused ₹13,050.83 crore and divested ₹7,254.22 crore, resulting in a net inflow of ₹5,796.61 crore.
Market Performance
On August 24, the Sensex concluded the trading session with a decline of 181 points, or 0.28%, settling at 65,252.34. The Nifty followed suit, ending the day at 19,386.70, down 57 points, or 0.29%. Despite this, mid and small-cap stocks showcased resilience and outperformed the benchmark index. The BSE Midcap index posted a modest rise of 0.11%, while the Smallcap index clocked a gain of 0.21%.
Global Clues and Interest Rate Speculations
The markets are abuzz with anticipation as they await hints on the interest rate trajectory, primarily from Federal Reserve Chairman Jerome Powell. Top officials from central banks including the Federal Reserve, the European Central Bank, the Bank of England, and the Bank of Japan are convening in Jackson Hole, Wyoming, for their annual conference on central banking.
US Economic Data and Bond Yields
The weakening US economic data, particularly the dip in US manufacturing PMI from 49 to 47, has led to a notable decline in the US 10-year bond yield by 14 basis points, reaching 4.19%. This shift has the potential to steer short-term capital flows in favor of emerging markets (EMs) like India, presenting opportunities amid changing global dynamics.
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