Friday’s US market selloff to weigh on Dalal Street sentiment

MUMBAI: Stock markets are expected to open weak on Monday on the back of the massive sell-off on Wall Street on Friday evening. As US stocks, especially the ones linked to the AI ecosystem, faced a huge sell-off, by late evening the Gift Nifty index, a proxy for Indian market for late trades, closed 1.5% lower. Eventually, Nasdaq closed 4.2% lower, S&P 500 ended 2.6% down, while Dow Jones was down 1.4% at close. Brokers and analysts on Dalal Street are expecting follow-up selling in the domestic market on Monday.Traders expect Indian stocks to remain under pressure, mainly due to selling by foreign funds as they gauge the impact of Friday’s sell-off in the US markets. On the other side, there is a small group of people who believe that since foreign funds have been selling India for the last several months, mainly due to the AI-led rally in some of the global markets in which India has lagged behind, Friday’s sell-off may now prompt foreign funds to look at India as an investment destination again. The added booster could be the series of steps that the government-RBI combine announced on Friday.According to VK Vijayakumar of Geojit Investments, if foreign portfolio investors (FPIs) are to invest in India, the AI trade, which has been the principal driver of FPI outflows away from India, should change. “There are early signs of this happening. The crash in the Nasdaq by about 5% on June 5 is an indication that the AI bubble may burst.”So far in June, FPIs have net sold stocks worth nearly Rs 43,000 crore, eclipsing May’s figure of almost Rs 33,000 crore. In 2026 so far, net outflow from stocks is nearing Rs 3 lakh crore, a new yearly record.