Foreign Institutional Investors have been on a selling spree in the Indian markets since the start of the year. Selling from FIIs over the last 16 sessions has amounted to nearly Rs 25,000 crore

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In US Dollar terms, the Indian market is up 1 percent so far this year. However, other markets are up much more.

But where are the funds heading?

The data shows that FII flows are heading out to the markets that underperformed in 2022.

So far, India has seen outflows worth $1.4 billion. On the flip side, other markets have seen inflows ranging from $500 million all the way to $3.5 billion.

Therefore, the difference between what India has done in terms of returns and flows this year, suggests that there is some reallocation that is taking place, or some tactical shift in funds, or some other factors, whatever they may be, but the underperformers of last year are getting the flows.

The question is, will it continue to happen?

In hindsight, the feedback that one gets after talking to people who invest here, and around the world, is that perhaps this has got a little bit more to go before things normalise a little bit.

On the Nifty 50 it is crucial that the index holds on to that level of 17,800. The index made multiple attempts at breaking its December 26 low of 17,774 and even briefly went below it intraday on Thursday when it made a low of 17,761, but managed a recovery every single time.

Otherwise, the next big support is the retracement from the June 2022 lows of 15,183 to the all-time high, and that comes up to around 17,500. So if these levels are broken, technically, the Nifty 50 could be staring at a 300-point downside that starts to open up.

The Nifty Bank index never broke its December low of 41,569, which becomes the support. For both Nifty 50 and the Nifty Bank, sustaining above their respective 20-day moving average, which is not far from current levels, will add some more confidence to the bulls, even if it may not be a trend changer.

Also Read: HDFC Bank Q3 Result: NII growth best in seven years, asset quality remains stable

Next week in terms of cues, there are plenty of earnings as we really get into the thick of the earnings season.

Also, global cues are always important to track. We are two weeks away from the Budget. There is no clear trend on market returns two weeks from the budget. So, there's quite a handful that we have to deal with in the upcoming weeks with regards to earnings and the market movement itself.

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