The largecap segment, which has been reeling from the sustained exodus of foreign investments for several years, is now facing additional pressure as domestic flows begin to wane. Fund managers believe the outflows from active largecap funds could trigger a vicious cycle unless foreign portfolio investor (FPI) flows return. In the absence of domestic support, largecap stocks may remain under pressure, further dampening investor interest in dedicated largecap funds. Active largecap funds saw net outflows of ~1,322 crore and ~1,147 crore in July and August, respectively. However, passive fund inflows remain buoyant, with much of the money going into schemes tracking the Nifty 50 and Sensex.

Nifty 50 approaching ‘oversold’ territory

The benchmark Nifty 50 is approaching the “oversold” territory as the seven consecutive weekly correction has weakened technical parameters of the widely-tracked index, say analysts. According to Dhupesh Dhameja, derivatives research analyst at SAMCO Securities, its relative strength index (RSI) currently stands at 31.22, close to the “oversold” threshold of 30. “While the indicator is approaching oversold territory, a technical bounce would require price-based confirmation rather than RSI alone,” he said. According to a Choice Institutional Equities analysis, Nifty is “witnessing a gradual deterioration in its weekly structure, with the recent breakdown below the 23,070 support zone weakening the near-term setup”. It sees 22,380 level as a key support and 23,400 as immediate resistance.

IPOs to shrink; listing expectations mixed

The initial public offering (IPO) momentum, while sustaining in terms of number of launch, is set to decelerate this week with respect to the issue sizes. Four mainboard IPOs are set to open with total issue size of around ~600 crore. On the listing front, grey market signals positive but selective investor optimism, with most upcoming issues trading at a premium to their issue prices. Moneyview, Orient Cables and SRIT India command GMPs of 24-41 per cent, while German Green Steel and A-One Steels also trade at premiums. However, lower premiums for Acevector, Shah Investors’ Home and Runwal Enterprises, along with zero GMPs for two issues.