Indian shares fall as foreign outflows persist, oil weighs

Indian shares ended lower in a volatile session on Monday, weighed down by continued foreign investor selling and higher oil prices, which offset healthy earnings from HDFC Bank.

The Nifty 50 index NIFTY closed 0.34% lower at 17,894.85, while the S&P BSE Sensex SENSEX fell 0.28% to 60,092.97. Both benchmarks had risen more than 0.5% earlier in the session.

Ten of the 13 major sectoral indexes declined, with heavyweight financials CNXFINANCE falling 0.75% and metals CCNXMETAL losing 1.32%.

The reversal in the broader market almost mirrored the downturn in financials, which surrendered intraday gains, as did HDFC Bank HDFCBANK despite a better-than-expected quarterly report. The stock of the country's largest private lender closed nearly 1% lower.

The broader weakness was due to foreign selling in Indian equities given their high valuations relative to markets such as China and Taiwan, where allocations were lowered earlier due to COVID curbs, three analysts said.

"The volatility in the markets will continue in the near term due to extended selling by foreign portfolio investors (FPI)," said Siddhartha Khemka, head of research (retail) at Motilal Oswal Financial Services.

Data showed FPIs have sold 150.68 billion rupees ($1.85 billion) worth of equities so far this year.

Foreign institutional investors (FIIs) have been net sellers for the last sixteen sessions in a row – the longest such streak in six months, according to exchange data – offloading nearly 239 billion rupees worth of securities since Dec. 23.