The Indian benchmark indices fell on Thursday as the Sensex declined over 400 points to settle at 76,152 and the Nifty fell more than 40 points to close trade at 23,870 at 3:30 PM.
Previously, during the early morning trade, the Sensex opened 334.16 points to open at 76,904.51, while the Nifty opened 95.45 points higher at 24,009.90.
Indian equity markets could see some improvement in sentiment on Thursday after US bond yields eased slightly and India recorded strong foreign-currency deposit inflows under a special Reserve Bank of India programme aimed at strengthening foreign-exchange liquidity.
Analysts said the record mobilisation through the Foreign Currency Non-Resident (Bank), or FCNR(B), deposit scheme could support the rupee and boost investor confidence.
“The market sentiment is likely to look up on Thursday following the slight easing of the US bond yields. A big positive from the rupee perspective is the huge mobilisation of USD 136 billion under concessional swap facility. The USD 127 billion mobilised under the FCNR(B) scheme has come way above the consensus estimates. The implication of this from the market perspective is that the rupee will stabilise, imparting confidence to FIIs,” said V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd.
India mobilised a record USD 127.23 billion through foreign-currency deposits under a special central-bank programme aimed at bolstering the country's foreign-exchange liquidity.
The inflows highlight the growing role of the overseas diaspora as a buffer during periods of market stress.
According to the Reserve Bank of India, Foreign Currency Non-Resident (Bank), or FCNR(B), deposits stood at USD 127.226 billion as of August 31.
Foreign Institutional Investors (FIIs) bought equities worth Rs 6,688.37 crore on Wednesday, while Domestic Institutional Investors (DIIs) purchased shares worth Rs 2,812.98 crore, according to exchange data.
Vijayakumar pointed out that the market's decline on Wednesday came despite institutional buying of around Rs 9,500 crore.
“An interesting feature of Wednesday's market decline is that the 141-point dip in Nifty happened despite Rs 9,500 crore of institutional buying, with FIIs buy figure of Rs 6,688 crore and DII buy figure of Rs 2,812 crore. So, it is obvious that the brunt of the selling came from retail investors, proprietary traders and bears who used the market weakness to hammer the stocks down. This is likely to reverse on Thursday,” he added.
Brent crude, the global oil benchmark, declined 0.17 per cent to USD 95.47 a barrel.
In Asian markets, South Korea's Kospi, Shanghai's SSE Composite index and Japan's Nikkei 225 traded higher, while Hong Kong's Hang Seng index quoted lower.
US markets ended higher on Wednesday.
The domestic benchmark indices remained under pressure on Wednesday, extending their losses for a third consecutive session.
The 30-share BSE Sensex fell 373.93 points to settle at 76,570.35, while the NSE Nifty declined 141.35 points to close at 23,914.45.
With US bond yields easing and strong FCNR(B) inflows supporting the rupee outlook, analysts expect market sentiment to improve on Thursday.
