Hello, this is Daily Stock, delivering live global financial flows daily.
[Image: /stdaily/uploads/202608/gen_6a8de743d1fba0.45748672.png]
Key Summary
- Recently, the global stock markets have been showing a "tri-polar decoupling" trend where fundamental divergence among major regions—such as the US, Europe, and Asia—is maximizing.
- The Indian SENSEX index recently stood at 77,656.09 points during intraday trading (provisional), halting its short-term downward trend and attempting to settle at the 77,650 level.
- Although massive Foreign Institutional Investor (FII) outflows of approximately 1.51 trillion rupees (approx. 1.51 lakh crore) since the beginning of the year put pressure on the market, buying from Domestic Institutional Investors (DII) defended the downside.
- With India's services PMI rebounding to 54.5 in August and international crude oil prices stabilizing below $90 per barrel, the possibility of a liquidity rotation back into emerging market funds is cautiously emerging.
Current Status Summary
Global financial markets are undergoing intense regional divergence, driven by the solo strength of the US economy, a prolonged manufacturing slump in Europe, and the realignment of the supply chain in emerging Asia.
While the Nasdaq recorded 26,131.48 points on the back of strong US services sector performance, performance in Asian markets remains mixed depending on localized supply and demand conditions.
As of today's intraday trading (provisional) in Korean time, the KOSPI index stands at 6,742.74 and the KOSDAQ index is at 827.15, while the USD/KRW exchange rate is trading at 1,383.70 won.
Under these circumstances, Daily Stock's own Fear and Greed Index shows a Neutral rating of 48 for KOSPI and a Neutral rating of 54.6 for Nasdaq, reflecting the cautious attitude of market participants.
India's representative index, SENSEX, recently closed at 77,656.09 points during intraday trading (provisional), up 286.98 points (+0.37%) compared to the previous trading day.
The Nifty 50 index, which moves in tandem, also traded at 24,334.55 points (+0.48%), successfully recovering the psychological support line of 24,300.
Looking at recent foreign capital flows, as of August 24, Foreign Institutional Investors (FIIs) recorded a net purchase of approximately 118.17 billion rupees (crore) in the Indian stock market, turning net buyers for the first time in three days.
On the same day, Indian Domestic Institutional Investors (DIIs) also registered a net purchase of approximately 249.34 billion rupees, driving the index rebound through dual buying support.
Financial Analysis
Leading indicators evaluating the fundamental strength of the Indian economy reveal a sharp contrast between manufacturing and services.
Published as a preliminary figure for August, the HSBC India Composite PMI (Purchasing Managers' Index) recorded 54.6, rebounding slightly from its 52-month low (54.3) recorded in July.
This rebound was possible because the Services PMI rose 1.2 points from 53.3 in July to 54.5 in August, leading the overall expansion.
Employment in the services sector grew at its fastest pace in 15 months, boosted by an increase in new orders.
On the other hand, the Indian Manufacturing PMI came in at 52.9 for the August flash estimate, falling from the previous month (53.5) and dropping to a 5-year low.
Notably, employment in the manufacturing sector contracted for the first time in two and a half years due to supply chain bottlenecks and slowing orders.
This domestic diversification is closely linked to global commodity price trends and macroeconomic indicators.
The table below summarizes the recent trends of key indicators to gauge the current state of the Indian stock market and real economy.
| Classification | Recent Figure (As of August 2026) | MoM Trend / Direction | Remarks |
|---|---|---|---|
| **India SENSEX Index** | 77,656.09 (Recent Intraday Prov.) | +0.37% (vs. Prev. Day) | Failed to break all-time high for 697 days |
| **India Nifty 50 Index** | 24,334.55 (Recent Intraday Prov.) | +0.48% (vs. Prev. Day) | Attempting to recover technical support |
| **India Composite PMI** | 54.6 (August Flash) | Up +0.3 points | Rebounded from July's 52-month low (54.3) |
| **India Services PMI** | 54.5 (August Flash) | Up +1.2 points | Employment reached a 15-month high |
| **India Manufacturing PMI** | 52.9 (August Flash) | Down -0.6 points | 5-year low, employment turned negative |
| **FII Cumulative Net Sell (YTD)** | Approx. 1.51T Rupees (~1.51 lakh crore) | Record high level since YTD | Impacted by global safe-haven preference |
Valuation
From a valuation perspective, the Indian SENSEX index has undergone a significant correction compared to its historical valuations.
Indeed, the SENSEX index has failed to hit a new all-time high for approximately 697 days after touching its historical peak, marking its longest bearish cycle since 2012.
According to historical data compiled since 1980, the Indian stock market typically experiences an average annual intraday/intra-year correction of around 20%.
However, in 37 of the 46 years surveyed, the market closed with positive returns at the end of the year, demonstrating long-term upward resilience.
As the SENSEX index corrected by about 9.37% due to foreign capital outflows since the beginning of the year, the valuation pressure of India's price-to-earnings (P/E) ratio, which was once excessively high, is analyzed to have eased to some extent.
Considering that the US S&P 500 index remains in historically overvalued territory, the relative valuation attractiveness of the Indian market is increasingly supported, primarily led by domestic capital.
[Image: /stdaily/uploads/202608/gen_6a8de74cc60449.90839906.png]
Expert & Institutional Analysis
Global investment banks (IBs) and market analysts analyze that the recent rebound in the Indian stock market is closely related to falling international commodity prices.
As Brent crude futures dropped below the $90-per-barrel mark to trade at $89.32, cost pressures eased significantly for Indian companies, which rely on imports for over 80% of their crude oil.
For instance, Vinod Nair, Head of Research at Geojit Financial Services, evaluated that global oil prices and treasury yields stopped surging as the US sanctions package on Iran turned out to be milder than initially feared by the market.
He diagnosed that this energy cost relief, coupled with supply-demand factors on derivatives expiry day, drove a strong rally in the latter half of the Indian stock market.
Additionally, technical analysts are considering a scenario where global bond yields stabilize and foreign capital inflows accelerate in earnest.
If the downward stabilization of international oil prices remains firm, positive scenarios suggest that the Nifty index could expand its upside target to as high as 28,615 by the end of December.
Risk Factors
However, macroeconomic uncertainties remaining everywhere are cited as risk factors holding back a structural rebound in the Indian stock market.
First, because concerns over commodity supply disruptions from geopolitical instability have not entirely faded, there is an ongoing possibility that Middle East risks could resurface and cause oil prices to spike.
Second is the scenario of global supply chain disruptions and slowing global economic growth.
The drop in India's Manufacturing PMI to 52.9 and contracting employment indicate that the growth engine of the export-oriented manufacturing value chain is somewhat weakening.
Third is the concern of liquidity flight due to differing tightening intensities across regions.
If the US Federal Reserve maintains its higher-for-longer interest rate stance and liquidity continues to withdraw from emerging markets back to the US mainland, the capital outflow of 1.51 trillion rupees seen since the start of the year may be difficult to calm in the short term.
Investment Outlook Summary
Overall, the Indian SENSEX index is highly likely to continue its breathing spell around the 77,650 level in the short term, supported by stabilizing oil prices and the resilient recovery of the services PMI.
However, for this to translate into a full trend reversal, conditions must be met where selling by Foreign Institutional Investors (FIIs) halts and changes to sustained net buying over the longer term.
At the same time, it is crucial to closely monitor whether the steady inflows of Systematic Investment Plans (SIP) from domestic institutional investors (DIIs) can continue to serve as a safety cushion in the second half of the year.
It would be rational for investors to maintain a staggered, dollar-cost-averaging approach while closely observing the policy decoupling cycles among the US, Europe, and Asia.
Investor Checkpoint Q&A
Q1. What is the recent trend of the Indian SENSEX index in 2026?
A1. Based on recent provisional intraday figures, the SENSEX index successfully achieved a short-term rebound to 77,656.09 points, but it remains within a long-term rangebound box after underperforming compared to its peaks earlier in 2026.
Q2. Why is the net selling scale of Foreign Institutional Investors (FIIs) so large in 2026?
A2. Amid global interest rate trends and geopolitical anxieties, a stronger risk-off sentiment has led to massive foreign capital outflows of approximately 1.51 trillion rupees (approx. 1.51 lakh crore) since the beginning of the year.
Q3. How is the Indian stock market staying resilient without crashing despite foreign capital outflows?
A3. Strong buying by Domestic Institutional Investors (DIIs), backed by retail investors' Systematic Investment Plans (SIPs), is actively absorbing the foreign sell-offs and serving as a robust safety cushion.
Q4. What were the recent real economic indicators (PMI) for India?
A4. The preliminary Indian Composite PMI for August rebounded slightly to 54.6. While the Services PMI improved to 54.5, the Manufacturing PMI dropped to a 5-year low of 52.9, highlighting divergence.
Q5. What are the key macroeconomic variables that will drive the rebound of the Indian stock market in the future?
A5. The main keys are whether international crude oil (Brent) prices stabilize downward below $90 per barrel and whether global foreign capital flows back into emerging markets following shifts in the US Federal Reserve's monetary policy.