The May Nifty option chain and the three-month Nifty chains offer several signals worth noting.
The indices closed with losses for the week, with the Sensex declining 476.14 points, and the broader NSE Nifty falling 155.45 points during the period.
The rupee recovered from more-than three months low of 63.15 in early trade on dollar selling by banks.
At the Interbank Foreign Exchange market, the domestic unit commenced higher at 61.80 a dollar from previous close of 61.92.
Year 2017 will be a benign year for FII flows into India feels Akash Singhania, deputy chief investment officer, DHFL Pramerica Asset Managers.
In the Sensex kitty on Wednesday, Tata Motors emerged as the top loser falling 3.01 per cent, followed by Vedanta shedding 2.92 per cent. Other laggards include HUL, Kotak Bank, NTPC, Infosys, HDFC Bank, Bajaj Finance, Hero MotoCorp, ICICI Bank, Yes Bank, HDFC, IndusInd Bank and PowerGrid, falling up to 1.77 per cent.
As investors try to second-guess the US Fed, corporate and election results could have a bearing on market direction
Torrent Pharmaceuticals' Rs 3,000 crore proposal for increasing FII investment limit to 35 per cent was the biggest in terms of value
Sebi's new FPI regulation has helped attract new capital pool, up registrations.
The fall was led by L&T, IndusInd Bank, PowerGrid, NTPC, TCS, ICICI Bank, Axis Bank, Hero MotoCorp, Bharti Airtel and SBI, declining up to 2.64 per cent.
The latest macro-data from India is disquieting
Previous peak in 2010 crossed in first five-and-a-half months this year.
The banking, oil and metal sectors were the top sectoral losers on the BSE, while IT stocks rendered support at lower levels.
Instead of being carried away by Friday's historic election verdict, savvy investors were seen taking money off the table, after the benchmark Sensex rallied about 1,500 points in intra-day trade.
Even domestic income can be subjected to scrutiny by the taxman.
Unfavourable secondary market conditions aren't a big concern for IPOs by good quality companies.
On the macro front, market participants will closely watch the FY'15 fiscal deficit target
Earlier, the rupee resumed slightly lower at 61.70 per dollar as against Tuesday's close of 61.69 at the Interbank Foreign Exchange market.
Tata Motors was the biggest loser in the Sensex pack, tumbling 2.47 per cent, followed by Reliance Industries (2.44 per cent), Maruti (1.84 per cent), SBI (1.76 per cent) and Bajaj Finance (1.23 per cent).
With the euphoria over the National Democratic Alliance's victory in the stock market continuing, the rupee is likely to touch 57 to the dollar soon.
A weak dollar overseas also aided the rupee rise while fresh sell-off by foreign funds in domestic stocks capped the currency's gains, forex dealers said.
Experts believe volatility is here to stay for some time, at least till China stabilises and clarity regarding the US Fed's interest rate move emerges.
Investor sentiment got a big push after Brent crude, the international benchmark, dropped below the $73-mark to quote at a seven-month low of $72.65
The rupee on Friday resumed lower at 60.25 a dollar from previous close of 60.19 at the Interbank Foreign Exchange market.
In the currency markets, the rupee lost another 10 paise to close at 1-week low of 63.54 against the US dollar
The brokerage, which previously had a target of 31,000, cited global growth concerns for revision in the target.
It is suspected that some portfolio managers at these banks, which have significant presence in Indian financial markets, could have helped their Indian clients to route their money back into India in disguise of foreign funds through use of investment vehicles across various jurisdictions.
'...and defensive until the global macro headwinds turn more benign.'
Experts said equity raising was also hampered due to flight of capital from foreign investors. FIIs have sold more $500 million (Rs 3,200 crore) in October.
The panic selling that was seen across global equity markets (including India) during the previous week was a fallout of the Federal Reserve's view that US interest rates are in for a faster rise going forward. \n\n
As many as 142 stocks from the S&P BSE500 index are currently trading below their level of May 12, 2014
Sustained foreign fund inflows and strengthening rupee are among the main reasons behind the market rally.
Other than ITC, other laggards include PowerGrid, Infosys, M&M, NTPC, SBI, HDFC, Kotak Bank, HDFC Bank, TCS, Hero MotoCorp, Coal India, ONGC, RIL, Asian Paint, IndusInd Bank, ICICI Bank, Maruti Suzuki, Bajaj Auto, Tata Motors, Bharti Airtel and Axis Bank.
The new norms provide an operational framework for FPIs, a new class of overseas investors that club all existing class of investors like foreign institutional investors and Qualified Foreign Investors.
The Street was hoping that investors will lap up shares of high-dividend companies on optimism that their payouts will increase further, thanks to the 20 per cent tax saving. However, the trade failed to materialise as wealthy investors stayed away fearing high tax outgo, and experts raised doubts on whether companies would actually increase cash dole outs.
Sentiments took a hit after broader Asian markets weakened, following a renewed sell-off on Wall Street on Tuesday as energy shares dropped after crude oil prices plunged to a 13-month low amid weak earnings and US-China trade disputes, fuelling worries about economic growth
Indian benchmark indices may witness bouts of volatility this week as traders roll over positions in the derivative segment on expiry of near-month contracts, say experts.
When selecting investments, pay attention to potential return, risk and how easily you can exit it.
Investors should take this opportunity to look at asset allocation and realign their portfolio.
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