Markets dip as Hindustan Unilever slumps; foreign fund outflows continue

Equity markets in India turned negative on Thursday after a promising start as continuous foreign fund outflows and disappointing earnings from Hindustan Unilever weighed heavily on investor sentiment The BSE Sensex initially rose by 17784 points reaching 8025982 while the NSE Nifty climbed 4515 points to 2448065 in early trade However the early rally soon faltered with both indices slipping into negative territoryBy midsession the BSE benchmark index had dropped by 21912 points trading at 7986286 while the Nifty fell by 74 points to 2436150 The sharp decline was largely driven by Hindustan Unilever which saw a significant 537 drop following its disappointing secondquarter results The company reported a 23337 decline in consolidated net profit totalling Rs 2595 crore for the quarter ending in September 2024 The FMCG giant cited a slowdown in urban demand as a key factor behind the lowerthanexpected earningsOther major losers in the Sensex pack included Nestle Bharti Airtel Bajaj Finserv ICICI Bank and Maruti Suzuki In contrast stocks such as HDFC Bank Mahindra amp Mahindra UltraTech Cement Sun Pharma Power Grid and HCL Tech managed to post gains despite the broader market weaknessForeign Institutional Investors FIIs continued their selling spree offloading equities worth Rs 568463 crore on Wednesday as per exchange data In contrast Domestic Institutional Investors DIIs remained net buyers purchasing shares worth Rs 603990 crore offering some support to the marketThe persistent FII selling which has totalled Rs 93088 crore as of 23rd October is a major headwind for the market according to V K Vijayakumar Chief Investment Strategist at Geojit Financial Services Elevated valuations in India combined with more attractive valuations in markets like China and Hong Kong are driving foreign investors away he explained He also noted that the markets current structure has shifted towards a sell on rally pattern as earnings growth struggles to keep up with market valuationsMeanwhile Prashanth Tapse Senior VP Research at Mehta Equities Ltd commented on the broader market sentiment stating The optimism in our markets has stalled after a tough trading session with the Nifty closing in the red for three consecutive days Key factors like disappointing corporate earnings FII selling concerns over the pace of US interest rate cuts and rising bond yields in the US are dampening bullish sentimentGlobal cues also played a role in Thursdays market activity with Asian markets trading mixed Tokyo remained in positive territory while Seoul Shanghai and Hong Kong posted losses The US markets closed lower on Wednesday adding to the cautious outlookIn addition to equity market movements global crude oil prices saw an uptick with Brent crude rising by 12537 to USD 7590 per barrelDespite the markets subdued performance experts believe there are opportunities for investors Shriram Subramanian Founder and MD of InGovern Research Services pointed out that mid and smallcap stocks are becoming attractive due to their current valuations While FIIs are selling DIIs continue to buy especially in stocks where valuations are appealing Largecap stocks however will likely continue to attract flows he addedVarun Aggarwal Founder and MD of Profit Idea also offered insights into the days trading noting that technical indicators like the Average Directional Index ADX suggest continued weakness He expects rangebound movement in the market with heightened activity around the 24500 level for the Nifty especially with tomorrows expiry approachingOverall Thursdayrsquos market action reflects the cautious stance of investors driven by global and domestic uncertainties as well as stockspecific developmentsWith inputs from Agencies