Maharashtra elections, anxious FPIs, and new IPOs: What’s in store for markets on Monday?

India’s stock market wrapped up last week with a steep 2.5% drop, driven by tempered earnings and persistent foreign investor sell-offs. As markets reopen on Monday, a mix of domestic and global cues, led by the Maharashtra election, foreign outflows, and global market trends, are likely to impact market sentiment.

Political Uncertainty from Maharashtra Election Investor focus this week is on the Maharashtra state elections, with results expected on November 23. Maharashtra, an economic giant within India, could see policy shifts that affect sectors tied closely to government decisions. With markets closed on November 20 for the elections, traders are bracing for potential volatility as the political landscape shifts.

Foreign Investor Exodus November continues to see major withdrawals by Foreign Portfolio Investors (FPIs), who pulled out Rs 22,420 crore from Indian equities in the first half of the month, following a massive Rs 1.13 trillion outflow in October. FPIs have also exited Indian debt markets, with outflows of Rs 4,717 crore. “Relentless FPI selling has been triggered by high valuations, earnings concerns, and global market shifts,” said Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services. The sustained outflow underscores mounting challenges for Indian equities.

Technical Pressure as Nifty 50 Falls Below Key Support The Nifty 50 index closed below its 200-day moving average last Thursday for the first time since April 2023, signaling technical pressure. Currently, the Nifty finds support in the 23,338-23,500 range, with resistance at 23,800. Analysts suggest a “sell on rise” strategy. The BSE Sensex also shed 0.14% last week, ending at 77,580.

New IPOs Stir Interest The IPO market is heating up with NTPC Green Energy’s public issue set to open on November 19, while Zinka Logistics Solution’s offering will close on November 18. Additionally, several new SMEs will list this week, bringing fresh activity to the mainboard and SME segments.

Rising Bond Yields and Strong Dollar Signal Emerging Market Challenges U.S. Treasury yields remain high, with the 10-year at 4.44%, while a strengthening dollar (index at 106.68) has increased the attractiveness of U.S. assets. The higher bond yields and strong dollar have dampened investor appetite for emerging markets, including India. Pravesh Gour of Swastika Investmart pointed out, “High U.S. bond yields and a stronger dollar post-election have impacted Indian equities.”

Crude Oil Slumps Amid Weak Demand International crude prices fell sharply last week due to concerns about weaker Chinese demand and a potential pause in U.S. interest rate cuts. Brent crude closed at $71.04 per barrel, down 3.8%, while U.S. WTI dropped by 4.86%. The drop in crude prices could benefit Indian markets by reducing import costs, but it also reflects broader concerns about global demand.