The main reason for the slight decline in Indian stock indices on Thursday morning was profit taking following the most recent bull run. Sensex and Nifty both fell by 0.2%. Yesterday, the indices reached yet another new high, and the benchmark Sensex went over 67,000. With Nifty Bank, Nifty Financial Services, Nifty Media, Nifty PSU Bank, Nifty Consumer Durables, and Nifty Oil and Gas rising the most, all of the Nifty sectoral indices were in the green. The indices, Sensex and Nifty, collectively increased by about 6 percentage points over the previous month.
Several analysts have pointed out that any further rally from the current levels is unlikely as valuations are higher.
“Even when the market is scaling new highs and the undercurrent is positive, there are strong views that the current high valuations cannot be sustained for long. It is important to understand that the DIIs (domestic institutional investors) are not bullish about the market at the current elevated valuations,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The consistent inflow of foreign portfolio funds, firm economic outlook, firm global markets, and a relative moderation in inflation contributed to the latest bull run in Indian stocks.
According to information provided by the National Securities Depository (NSDL), foreign portfolio investors (FPIs) have continued to be net buyers on the Indian stock markets for the fifth consecutive month. In March, April, May, and June, respectively, FPIs purchased Indian stocks for amounts of Rs 7,936 crore, Rs 11,631 crore, Rs 43,838 crore, and Rs 47,148 crore. They purchased shares worth Rs 36,971 crore in July, continuing the trend.