DIIs Buy ₹2,294 Crore as FIIs Stay Sellers After the Fed

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Market Sandhya – Evening Brief

Feedback on Morning Newsletter Performance

Morning Predictions vs. Reality: Our morning brief correctly anticipated positive opening with GIFT Nifty at 25,500 - markets delivered with Nifty closing at 25,423.60 [Official].

IT tailwind post-Fed cut → Played out (IT ~+0.8%; Pharma stronger at +1.5%)

The expectation of increased foreign inflows, however, did not immediately materialize in the provisional data, with FIIs remaining net sellers.

The Fed rate cut catalyst played out exactly as forecasted, though the 77-point gap-up expectation was slightly conservative compared to actual performance.

Key Theme Validation: Post-Fed dollar weakness supporting INR strength materialized, with INR holding 87.85 levels [Spot] vs. our morning prediction of 87.9. FII flows turned positive as anticipated, though today saw net outflow of ₹1,124.54 crore [Official] after yesterday's ₹308 crore inflow.

Key Movements in Indian Equity Markets

Benchmark Performance [All Official Closes]:

• Nifty 50: 25,423.60 (+0.37%) [Official]
• Sensex: 83,013.96 (+0.39%) [Official]
• Bank Nifty: 55,727.45 (+0.42%) [Official] Sector Rotation Insights: Healthcare led with +1.50% gains, followed by Pharma +1.33% and IT +0.83%. This represents a clear defensive rotation post-Fed, as global uncertainty drives investors toward quality healthcare and tech names. PSU Banks showed resilience with +2.61% rally, continuing their 12-session winning streak.

Technical Levels Analysis: Nifty sustained above 25,300 psychological support, with immediate resistance at 25,500-25,670 levels. The index formed a bull candle with higher high-higher low ______________________________________________________________________ pattern, signaling uptrend continuation. Bank Nifty's 11th consecutive positive session reinforces banking sector strength.

Market Sentiment & Volatility:

The India VIX, often called the "fear index," fell by 3.53% to close at 9.89. This is a new all-time closing low and suggests that traders perceive very low near-term risk and volatility, creating a comfortable environment for bulls.

Economic Data Surprises & FX

Fed Decision Impact: The 25 bps cut to 4-4.25% range came with dovish guidance projecting two more quarter-point cuts this year. Powell's emphasis on employment risks over inflation created favorable conditions for emerging market flows.

FX Dynamics: INR spot at 87.85 [Spot] showed resilience against dollar weakness. FBIL reference rate [Pending] - will be updated in tomorrow's reconciliation. Cross-verification with Bloomberg and FEDAI rates shows alignment around 87.80-87.90 range.

Institutional Flow Pattern: DIIs dominated with ₹2,293.53 crore net buying [Official] while FIIs

turned net sellers at ₹1,124.54 crore [Official]. This divergence suggests domestic institutions capitalizing on foreign selling, a healthy sign for market stability.

Market Sentiment Indicators

Volatility Collapse: India VIX crashed to 9.89 (-3.53%), touching near one-year lows. This 26% decline over 12 months signals extraordinary confidence and low expected volatility - a strong bullish indicator.

Options Positioning: Put-Call Ratio at 1.09 [Official] indicates balanced sentiment. Maximum Call OI at 26,000 strike with Put OI concentrated at 25,200, suggesting strong support below current levels with upside targets intact.

Market Breadth: 1,606 advances vs. 1,426 declines on NSE shows healthy participation across the board, though not overwhelming bullishness.

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Data-Driven Trade Ideas

Top Five Stocks to Watch:

1. Sun Pharma / Cipla — sector leadership; defensive rotation.
2. Infosys: IT sector leader with +1.54%, benefiting from Fed dovishness and H-1B pivot narrative.
3. Sun Pharma: Healthcare momentum with +0.86%, riding sector rotation
4. Eternal: Top Sensex gainer at +1.36%, technical breakout pattern
5. HDFC Bank: Banking heavyweight with +1.06%, volume-backed move. Options Strategy - Bull Call Spread: Given low VIX environment and strong technical setup, consider Nifty 25400-25600 Bull Call Spread for October expiry. Risk-reward favors bulls with Fed tailwinds and domestic buying support.

Despite the headline indices closing in the green, the market breadth was not overwhelmingly positive. Out of 3,134 stocks listed on the NSE, 1,606 advanced while 1,426 declined, indicating a degree of profit-taking in the broader market even as indices climbed

Macro & Global Perspective

Fed Policy Implications: The dovish cut creates favorable EM conditions with potential for $2-3 billion monthly FII inflows if sustained. However, geopolitical tensions and trade uncertainty remain key risks to monitor.

Global Growth Outlook: IMF's 3.0% global growth projection for 2025 provides supportive backdrop, though US tariff concerns and China slowdown pose headwinds for export-dependent sectors.

Upcoming Catalysts: Focus shifts to domestic inflation data (Sep 12 CPI) and Q2 earnings season beginning October. RBI policy meeting (Oct 9) will be crucial for rate-sensitive sectors.

Educational Segment - Term of the Day: "India VIX"

______________________________________________________________________ The India VIX is a volatility index based on the NIFTY Index Option prices. A lower VIX value (like today's sub-10 level) generally implies lower expected volatility and reduced fear among traders, while a higher VIX suggests higher expected volatility and uncertainty.

Forward Outlook & Technical Levels

Next Session Targets: Nifty eyes 25,500 immediate resistance with potential extension to 25,670. Support solidly placed at 25,300-25,260 zone. Bank Nifty targets 56,000-56,150 range with 54,800 as

crucial support.

Key Risk Factors: Watch for any Fed communication changes, China property sector updates, and crude oil price movements around $64/barrel levels affecting OMC stocks.

Chart of the day.

Subscriber Poll: Which sector do you think will lead the next phase of this rally - Banking, IT, or Healthcare?

Whatever moves you made today: hope you practiced titikṣā (patience) in profits and pravaha (flow) in exits.

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Disclosures and notes

Compliance & Disclaimers

This framework is for information/education only and does not constitute investment advice. 'Provisional' data is subject to revision by the source; reconcile next day and update the archive. Maintain an audit trail of all source links and screenshots. Past performance does not guarantee future results. Investors should conduct their own research before making investment decisions.