As the FII selling streak continues, markets end the day lower by 0.90 per cent. Analysts advise investors to look for undervalued stocks amidst "necessary correction".
Heavy selling pressure on Indian stocks continued on October 25, driven by disappointing quarterly results from various companies and ongoing foreign outflows. The S&P BSE SENSEX closed the day, down by 0.83 per cent, while the NSE NIFTY50 index fell by 0.90 per cent.
On Thursday, foreign investors (FIIs and FPIs) sold off equities worth Rs 5,062.45 crore, whereas domestic institutional investors (DIIs) stepped in to buy shares valued at Rs 3,620.47 crore. So far in October, foreign investors have offloaded Indian shares totalling Rs 97,205.42 crore.
CNBC TV18 cited Raamdeo Agrawal, Chairman and Co-Founder of Motilal Oswal Financial Services, calling the dip in the market "the healthiest possible correction," emphasizing that it was a necessary adjustment.
Analysts attribute this market correction to various external pressures, including geopolitical tensions in West Asia and uncertainties surrounding the forthcoming US presidential elections. However, regarding foreign institutional investors (FIIs), Agrawal observed minimal selling linked to developments in China, stating, "Not many FII outflows left on account of China." He stressed the importance of identifying companies with growth potential. He said he aims to find "a company which could be a doubler, adding that he has used a significant portion of his cash reserves in recent weeks to buy such stocks, signalling confidence in future market recovery. Agrawal said, "Patience is bitter but fruits are very, very sweet."
Further, Agrawal highlighted the Reserve Bank of India’s recent position on inflation as a critical concern for investors. Speaking on CNBC TV18's Market Movers Forum, Agrawal noted that while the earnings growth estimate for the current quarter stands at a modest 6 to 7 per cent, market expectations are overly optimistic, projecting growth rates between 15 to 20 per cent. This disparity points to a potential misalignment between market sentiment and actual economic conditions. Agrawal reassured audiences by stating, "This is an adjustment phase," and there is no cause for panic.