Markets fall dragged by Hindustan Unilever; massive foreign fund outflows

Mumbai: Equity markets turned negative after rallying in early trade on Thursday as unabated foreign fund outflows and disappointing earnings from Hindustan Unilever dented investors' sentiment.

The BSE Sensex climbed 177.84 points to 80,259.82 in early trade. The NSE Nifty went up by 45.15 points to 24,480.65.

However, soon the benchmark indices faced selling and were trading lower. The BSE benchmark gauge quoted 219.12 points lower at 79,862.86 and the Nifty traded 74 points down at 24,361.50.

From the 30 Sensex pack, Hindustan Unilever fell over 5 per cent after the FMCG major reported a 2.33 per cent decline in consolidated net profit at Rs 2,595 crore for the second quarter ended in September 2024 impacted by moderation in demand from the urban market.

Nestle, Bharti Airtel, Bajaj Finserv, ICICI Bank and Maruti were the other big laggards.

HDFC Bank, Mahindra & Mahindra, UltraTech Cement, Sun Pharma, Power Grid and HCL Tech were among the gainers.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,684.63 crore on Wednesday, according to exchange data. Domestic Institutional Investors (DIIs) bought equities worth Rs 6,039.90 crore.

"The major headwind that the market is facing now is the massive, unprecedented and sustained FII selling which has touched Rs 93,088 crore through 23rd October, as per NSDL data. The fundamental trigger for the FII outflows is the elevated valuations in India and the relatively cheap and attractive valuations in markets like China and Hong Kong.

"Uptrend in the market is not compatible with downtrend in earnings growth and, therefore, the market is witnessing selling at every rise, turning the near-term market structure into 'sell on rally'," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

In Asian markets, Tokyo traded higher while Seoul, Shanghai and Hong Kong quoted lower.

The US markets ended in the negative territory on Wednesday.

"The optimism in our markets has stalled after a rough trading session, much like a kite snagged on a branch. The Nifty has ended in the red for three consecutive days. Several factors are keeping bullish sentiments in check: disappointing Q2 earnings from corporate India, continued selling by FIIs, concerns over the pace of US interest rate cuts, and rising US bond yields," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

Global oil benchmark Brent crude jumped 1.25 per cent to USD 75.90 a barrel.

The BSE benchmark declined 138.74 points or 0.17 per cent to settle at 80,081.98 on Wednesday. The Nifty went lower by 36.60 points or 0.15 per cent to 24,435.50.