Market Update | Indian equities extended losses for the second straight session on Friday as persistent foreign institutional investor (FII) selling and weak global signals kept traders on edge. Benchmark indices Sensex and Nifty spent the day under pressure, closing firmly in the red amid broad-based profit booking.

Market Close

• Sensex: Down 449.32 points (0.53%) at 83,955.14

• Nifty 50: Down 155.75 points (0.60%) at 25,722.10

Despite the day’s fall, October turned out to be a strong month for domestic equities. Both indices logged their biggest monthly gains in seven months—driven by robust corporate earnings and attractive valuations—though they remain 2–2.5% below their all-time highs recorded in September 2024.

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Key Factors Behind the Market Decline

1) Heavy FII Selling

Foreign investors continued their selling spree:

• On Thursday, FIIs offloaded ₹3,077.59 crore worth of equities

• On Wednesday, they had withdrawn ₹2,540.16 crore

According to market strategists, renewed FII outflows have turned sentiment distinctly cautious.

Dr. V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services, noted that “the resurgence of FII selling is likely to remain a drag on markets in the near term.”

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2) Weak Global Cues Weigh on Sentiment

Asian markets traded lower, with the Shanghai Composite and Hang Seng both in negative territory. Overnight weakness in U.S. indices further dampened domestic sentiment.

Ponmudi R, CEO of Enrich Money, told PTI:
“Global markets are trading mixed this Friday morning. Investors are cautious as they assess the Fed’s policy outlook and await upcoming macroeconomic data. Across Asia, sentiment remains uneven amid lingering global volatility.”

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3) Uncertainty Around the U.S.-China Trade Deal

Talks between U.S. President Donald Trump and Chinese President Xi Jinping concluded in South Korea with both sides expressing optimism. However, analysts noted that the outcomes fell short of a comprehensive trade agreement.

According to experts, the summit delivered only a “one-year truce,” leaving markets wanting clearer, long-term assurances.

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4) Selloff in Banking Stocks

Banking counters saw significant pressure after SEBI issued new rules for the Bank Nifty index:

• The index must now include a minimum of 14 stocks, up from 12

• Weightages of top constituents—HDFC Bank, ICICI Bank, SBI—will be reduced in four phases

• Yes Bank, Indian Bank, Union Bank and Bank of India are among the potential new entrants

The regulatory overhaul triggered broad-based selling in major private and public sector banks.

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Technical Outlook: Resistance at 25,960

Technically, the market structure is weakening.
Anand James, Chief Market Strategist at Geojit Financial Services, commented:
“The bullish continuation setup is now shifting into a topping formation. Upside attempts may face resistance near 25,960. A sustained move above this could delay further downside, otherwise a slide towards 25,700–25,400 remains possible.”

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Major Laggards

Several large-cap stocks contributed to the drag on indices:

• NTPC, Eternal, Max Healthcare, Cipla, InterGlobe Aviation
  These fell up to 2%.

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Conclusion

After a strong October rebound, Indian markets are back in consolidation mode. Persistent FII outflows, global macro uncertainty, and domestic regulatory changes—particularly in the banking sector—are likely to keep volatility elevated. Market direction in the coming sessions will depend on global data cues, U.S. economic signals, and FII investment trends.

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