Market in oversold zone on FPI selling

Foreign portfolio investors (FPIs) dumped stocks on Tuesday as the rupee touched a new life low, a day after shock data on India's trade deficit in November.

- Ram Sahgal

The market fall, a day ahead of an expected interest rate cut in the US, also comes at a time of increased supply through initial public offers.

On Tuesday, in addition to cash sales, FPIs raised bearish bets on Indian derivatives. Trade data showed markets are in oversold territory, with chances of volatility increasing. BSE data showed FPIs net sold Indian shares worth a provisional ₹6,409.86 crore as the rupee plunged to a new low of 84.93, before recovering to close down three paise at 84.90. Though local institutions net purchased a provisional ₹2,706.48 crore, that was not enough to prevent the Nifty and Sensex from falling the most in nearly three weeks. While the Nifty tanked 1.35% to 24336, the Sensex shed 1.3% to close at 80684.45.

Data released on Monday showed India's goods trade deficit in November shot up to nearly $38 billion, an all-time high, as imports rose and exports fell.