Nifty 50 stuck in range? Sunil Singhania says multiple triggers needed for next leg up

Has Nifty 50 bottomed out? For those who thought neither side would let the US-Iran conflict linger on for so long and then got surprised for weeks running, there may be more for them to wonder about. Market veteran Sunil Singhania believes that the markets have reached a stage where "even if the conflict ends, people may find it hard to believe that it is actually over". His remarks come at a time when market benchmark Nifty 50 continues to stage rangebound moves in the last leg of the domestic earnings season and easing Middle East jitters.

In an exclusive conversation with Zee Business Managing Editor Anil Singhvi, Singhania, founder of Abakkus Asset Manager LLP, said: "Every day brings a new development or twist. Interestingly, global markets have started to ignore the situation to some extent. Even crude oil prices no longer react as sharply. Prices may rise 2-5 per cent initially, but then settle back."

For India, the biggest pressure has come from relentless FII outflows, said Singhania. "Domestic investors were absorbing much of that selling, but recently, the supply has increased significantly... We are seeing block deals almost every day. IPOs have returned. QIPs are being launched. This means fresh supply worth Rs 4,000-5,000 crore is hitting the market regularly," he said.

Foreign portfolio investors (FPIs) -- including FIIs -- net sold Indian shares worth $24.13 billion (Rs 2,24,932 crore) in the cash segment in January-May, much higher than their outflows of $18.91 billion (Rs 1,66,286 crore) in 2025, according to NSDL data. Most experts attribute their sustained outflows to moderate earnings growth, rupee weakness and the availability of more attractive opportunities in other markets.

In May, FPIs net offloaded equities worth Rs 55,963.3 crore while DIIs' net purchases amounted to Rs 82,668.9 crore. The market kicked off June on a weak note, with FPI outflows to the tune of Rs 3,912 crore while DIIs net bought equities worth Rs 5,109 crore.

DII buying has not been enough to fully absorb FII outflows: Sunil Singhania

"Foreign investors' continuous selling is putting significant pressure on the market. Earlier, domestic investors were buying and that was offsetting the impact. But recently, what we are seeing is a lot of fresh supply coming into the market... That large supply, combined with FII selling, is no longer being fully absorbed by domestic buying," said the market expert.

As of June 1, FIIs net withdrew Rs 26,060.3 crore from the cash segment in seven days while DIIs made net buys worth Rs 25,694.3 crore, as per the data.

He believes the market has limited downside at the current juncture.

Singhania attributed the market's sideways movement to DII inflows not fully offsetting unabated FII outflows.

"I do not see the market falling significantly from here, but for a meaningful upmove, we now need multiple triggers," he said.

In effect, Singhania believes the market may have limited downside from current levels, though a sustained rally would require fresh triggers.

Since the onset of the West Asia conflict, the Nifty 50 has seesawed within a nearly 3,300-point range, broadly between 22,150 and 25,500. In May, however, its rangebound move narrowed to the 23,200-24,500 band, with easing uncertainty around the Middle East conflict.

FIIs flocking to more attractive markets away from Dalal Street?

A significant portion of the recent leg of outflows is due to MSCI rebalancing, noted Singhania. "India's weight in MSCI indices has been gradually declining because markets such as Korea and Taiwan have performed much better. Since these are market-cap-weighted indices, their weightings increase as their market caps rise. India's relative underperformance has reduced its weighting... And then there's performance. Markets like Korea have delivered extraordinary returns," he said.

Effective May 29, index provider MSCI added Federal Bank, Indian Bank, MCX and NALCO to its Global Standard Index, while removing Hyundai Motor India, Jubilant FoodWorks, Kalyan Jewellers and RVNL. Index providers rejig their gauges from time to time to ensure that they accurately reflect market purpose and composition.

Singhania also highlighted that better returns naturally have investors leaning towards more attractive markets. In the past 6-12 months, those markets have delivered stronger returns while Dalal Street has lingered in the red.

"It is logical that fresh money would flow toward markets that appear stronger," he said.

Foreign portfolio investor inflows/outflows

Source: NSDL data

What will it take for FIIs to turn bullish on India again?

According to Singhania, Dalal Street needs a few positive triggers now to drive a reversal in FII outflows. Foreign investor money, he said, could start to return to the Indian market if:

• Oil falls further towards $80 per barrel
• The Centre announces growth-oriented measures in the Monsoon Session of Parliament
• The rupee stabilises further

"Many forward-looking investors may eventually decide that after making significant gains in Korea and Taiwan, it is time to rotate some capital back into India," said the fund manager.

Asserting that Dalal Street's relative underperformance will eventually reverse, he said: "The current enthusiasm around hyperscalers and semiconductor manufacturers is extremely strong, but India's weight in global indices cannot remain depressed indefinitely."

India continues to be the fastest-growing major economy

Singhania is bullish on the domestic economic story. "India remains the fastest-growing major economy. One out of every five people born after January 1, 2000, is Indian," he said.

Speaking about Korea, he said: "These markets are heavily dependent on one or two sectors and a handful of companies. Many of the extraordinary profits have come primarily from price increases rather than volume growth. Over time, competitors will build capacity, profit growth will normalise, and investors will begin questioning whether earnings have peaked... We have seen similar cycles before."

The India story...

"India is different," said Singhania, adding: "It is a diversified economy capable of growing 6-7 per cent structurally."

"We are not dependent on one sector or a handful of companies. Eventually, FIIs will return, market capitalisation will grow, India's weight in global indices will rise again, and the current headwind could turn into a tailwind," noted the eminent money manager.