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Institutional Buyers Drive Intraday Recovery
The Indian benchmark Sensex closed higher Monday after a volatile trading session. The index recovered sharply from significant intraday losses, finishing up 77 points at 75,315. This rebound occurred despite a sharp initial decline that saw the index drop considerably from its previous close.
Fund Inflows Cushion Market Falls
Foreign portfolio investors (FPIs) injected ₹2,814 crore into the market, while domestic institutions added ₹2,682 crore. This combined inflow of ₹5,500 crore focused on large-cap stocks, providing a crucial support against broader market pressures. Analysts noted this institutional buying was key to navigating the session's volatility.
Oil Prices and Rupee Pose Challenges
Market sentiment was initially dampened by rising geopolitical tensions, pushing Brent crude oil prices above $111 a barrel. The increase raised concerns about imported inflation and potential interest rate decisions from the Reserve Bank of India, especially as India imports most of its oil. Adding to these worries, the Indian rupee hit a new low, trading near 96.5 against the US dollar, which increases the cost of imports and fuels investor anxiety.
Large Stocks Gain While Mid and Small Caps Slip
While large-cap stocks found support from institutional buying, the broader market faced selling pressure. The BSE Mid-cap index slipped 0.2% and the Small-cap index saw a steeper decline of 1.5%. This divergence highlights investor caution towards smaller companies, which are often more vulnerable to economic downturns and currency depreciation. The total market value on the BSE dropped by about ₹2 lakh crore to ₹458.4 lakh crore. The market's sensitivity to global energy prices and currency fluctuations continues to be a key factor for investors.