• Indian shares opened lower due to a spike in retail inflation and dull earnings.
• Foreign investors have sold $14 billion of Indian stocks over the last 32 sessions, causing a 9.3% fall in the Nifty.
• Data shows India's retail inflation hit a 14-month high in October, dashing hopes of a rate cut in December.
• The Indian stock market is facing challenges due to rising inflation, dull earnings, and sustained foreign outflows.

Indian shares opened lower on Wednesday, November 13, 2024, as a spike in retail inflation dampened hopes of a rate cut by the Reserve Bank of India (RBI) next month. This has added to concerns over dull earnings and sustained foreign outflows. The NSE Nifty 50 shed 0.27% to 23,819.75 as of 9:30 a.m. IST, while the BSE Sensex lost 0.1% to 78,620.6. The benchmarks fell about 1% each in the previous session.

Foreign investors have sold $14 billion of Indian stocks over the last 32 sessions through Tuesday, as they move to China after Beijing's stimulus measures. This has triggered a 9.3% fall in the Nifty 50 from a record high hit on Sept. 27. A dull domestic earnings season, the worst in more than four years, has also hurt investor sentiment.

Data released after market on Tuesday showed India's retail inflation hit a 14-month high in October, dashing hopes of a rate cut in December. Ten of the 13 major sectors declined at the open. The broader, more domestically focused small- and mid-caps lost 0.7% and 0.5%, respectively.

Foreign Outflows and Inflation Impact

The Indian benchmark equity indices opened lower on Wednesday after a rise in October retail inflation dampened hopes of a rate cut by the Reserve Bank of India (RBI) next month, adding to market worries amid dull earnings and sustained foreign outflows. The BSE Sensex was down 138 points, or 0.17%, at 78,538, while the Nifty50 fell 64 points, or 0.27%, to trade at 23,819 around 9:20 am.

Data released post-market on Tuesday showed October retail inflation at a 14-month high, dashing the hopes of an RBI rate cut in December to support economic growth. Meanwhile, Foreign outflows, which continued for the 32nd straight session on Tuesday, aggregated to about $14 billion as investors redirected funds to China on Beijing's stimulus measures and cheaper valuations. This has triggered a nearly 9.5% fall in Nifty 50 from the record high hit on September 27.

A dull domestic earnings season, the worst in more than four years, has also hurt investor sentiment. From the Sensex pack, M&M, Maruti, Nestle India, Tata Steel, Sun Pharma, and ITC opened lower, while NTPC, Asian Paints, Bharti Airtel, and IndusInd Bank opened with gains.

Market Trends and Future Outlook

Among individual stocks, PNB Housing Finance dropped 8% in early trade as Quality Investment Holdings PCC reportedly sold its stake in the company through bulk deals. Nykaa shares jumped 6% in early trade after the company reported strong numbers in the second quarter ended September 2024.

On the sectoral front, Nifty Auto, Pharma, Realty, and Healthcare indices opened over 1% lower. Nifty FMCG, Metal, PSU Bank, Consumer Durables and Oil & Gas also opened in the red.

From the emerging market perspective, the rise in the dollar index and the sharp spike in the US 10-year bond yield to 4.42% are causes of concern. Such high yields in US bonds will facilitate more outflows from emerging markets to the US. This will continue to be a headwind for India, said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.