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Why are Indian markets falling despite strong domestic fundamentals? Expert answers

Indian equity markets have remained under pressure in recent sessions, even though domestic economic indicators continue to look strong. Market experts say the main concern is persistent selling by foreign investors, which has weighed heavily on both the rupee and stock prices.

Sudip Bandyopadhyay of Inditrade Capital said the sharp fall in the rupee has further unsettled overseas investors. “A couple of things are happening. One is sharp rupee depreciation, which has spooked foreign investors even more,” he said. He added that selling has not been limited to equities alone. “Even bond investors have been selling in the last few days, and that has had a massive impact on the currency.”

The Reserve Bank of India stepped in to support the rupee, leading to some recovery. However, Bandyopadhyay believes the bigger issue remains unchanged. “Fundamentally, Indian markets are being hit by continuous FII selling, and there is no sign of that stopping,” he said.

Despite positive domestic developments, foreign outflows are driving market sentiment. “Domestic factors are looking all positive, but the relentless selling by FIIs is leading to this situation in the market,” he noted.

Bandyopadhyay said global cues are also missing at the moment. “As things stand today, there are no fresh positive triggers coming from global markets.” He added that sentiment could improve if a US trade deal or a Russia-Ukraine peace agreement is reached.

Looking ahead, he remains cautiously optimistic. “Interest rates and inflation have come down, demand has improved, and we are expecting even better numbers from corporates in Q3 and Q4,” he said.

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