It was a third straight week of losses for the benchmark indices, led by losses in heavyweight Reliance Industries. The Nifty ended the week 3.7 per cent lower, and lost ground on all five trading days of the week.
Foreign Portfolio Investors sell
Foreign Portfolio Investors have been selling in the markets on a consistent basis. Their net sales for the month of Feb, 2019 has been almost Rs 4,000 crores. On the other hand, domestic institutions have net bought in the Indian markets to the tune of Rs 2,142 crores.
It's important to remember that mutual fund inflows have slowed considerably in the month of April, thanks to the impending election outcome. However, what is heartening is that flows by way Systematic Investment Plans continues to remain robust. If FPIs continue to press sales, we will seee markets falling even further.
Reliance Industries leads the fall
Reliance Industries led declines this week, as the company shed more than Rs 1 lakh crores in market capitalization in 5 trading sessions. In the process it also lost the most valuable company in terms of market capitalization to Tata Consultancy Services.
Investors remain worried that the company would now find it difficult to source Iranian and Venezualan crude. Morgan Stanley recently downgraded the stock, which added some pressure on the shares this week. Further downside in the shares cannot be ruled out.
Election outcome crucial
As we draw closer to the election, there seems to be mounting fears that the NDA led BJP is unlikely to get a clear majority. In fact, while the results will be declared on May 23, some indication would emerge after the exit polls on May 19. In the meantime, it is good to keep the powder dry and sit on cash and wait for the election outcome.
One also needs to stay invested in high quality stocks with very strong fundamentals.
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