The equity segment bore the brunt of the selling pressure, with FPIs pulling out ₹2,608.57 crore on July 4
Foreign Portfolio Investors (FPIs) withdrew ₹2,176.40 crore from Indian markets on Friday, marking the second consecutive day of net outflows as markets ended the week lower amid uncertainty surrounding US-India trade negotiations.
The equity segment bore the brunt of the selling pressure, with FPIs pulling out ₹2,608.57 crore on July 4. This followed a net outflow of ₹747.11 crore on July 3, reversing the trend after three days of strong inflows earlier in the week that totalled over ₹10,000 crore.
“Markets witnessed a mild pullback after an initial surge post-breakout, losing over half a percent during the week,” said Ajit Mishra, SVP Research at Religare Broking Ltd. “Uncertainty surrounding trade negotiations ahead of the July 9 deadline kept risk appetite in check from the outset.”
The Nifty closed at 25,461.00 while the Sensex settled at 83,432.89, both ending lower for the week despite an initial surge. The selling was primarily attributed to profit-taking as investors adopted a cautious stance ahead of key global trade events.
However, debt markets provided some cushion, with FPIs investing ₹451.29 crore across various debt segments on Friday. The debt-FAR category saw the highest inflows of ₹324.26 crore, while debt-general limit attracted ₹91.60 crore and debt-VRR recorded ₹36.41 crore of net investment.
“The decline was primarily driven by profit-taking, as investors adopted a cautious stance ahead of key global trade events,” Mishra noted. “However, the downside remained limited following reports of a likely interim deal between India and the US ahead of the scheduled deadline.”
For the week ending July 4, FPIs showed mixed behaviour with significant volatility. The week started strong with net inflows of ₹9,815.71 crore on July 1, followed by ₹3,339.73 crore on July 2, before turning negative in the last two sessions.
Vinod Nair, Head of Research at Geojit Investments, observed that “FIIs have turned cautious amid elevated market valuations and mixed global cues, while DIIs continue to provide support, helping stabilise sentiment.”
The sectoral performance remained mixed throughout the week. “IT and healthcare stocks outperformed, buoyed by defensive positioning and stock-specific developments,” Mishra said. “Conversely, rate-sensitive sectors such as realty, banking, and auto witnessed selling pressure due to profit booking, while FMCG also edged lower.”
Defence stocks emerged as outperformers during the week. “Defence stocks outperformed, buoyed by the approval of large defence contracts, reflecting continued government focus on strategic sectors,” Nair explained.
Broader markets showed resilience compared to benchmark indices. “Broader markets fared better than the benchmark indices, with the midcap and smallcap indices rising in the range of 0.3% to 0.5%, signalling continued investor interest in select non-index stocks,” according to market analysis.
The mutual fund segment saw mixed flows, with equity schemes recording net inflows of ₹3.79 crore on Friday, while debt schemes witnessed outflows of ₹27.00 crore.
Looking ahead, market participants are focusing on the upcoming US trade deadline on July 9. “The coming week holds significant importance not only for Indian markets but for global equities as well. The most anticipated event is the outcome of the US trade deadline on July 9, which could shape global trade dynamics,” Mishra stated.
The earnings season is also set to begin with IT major TCS and retail giant Avenue Supermarts among the prominent companies scheduled to report quarterly results. “Considering the broader indices currently trading at elevated levels, the market participants will closely watch for signs of earnings catch-up from upcoming Q1 — starting next week,” Nair added.
From a technical perspective, the Nifty has reverted to its consolidation phase after a brief breakout. “A decisive move beyond the gap area — i.e., the 25,650-25,750 zone — will be required to resume the uptrend toward fresh all-time highs,” according to technical analysis.
