☰
This trend has persisted for months, with early March seeing substantial selling, particularly in the technology and consumer goods sectors. Concerns over economic conditions in both India and the United States have further fueled the selloff.
Indian stock market indices, Sensex and Nifty, have witnessed a sharp decline from their lifetime highs, leading to significant losses for investors. The ongoing market correction has erased several lakh crores in investor wealth, while foreign portfolio investors (FPIs) continue their sustained withdrawal from Indian equities.
This trend has persisted for months, with early March seeing substantial selling, particularly in the technology and consumer goods sectors. Concerns over economic conditions in both India and the United States have further fueled the selloff.
Also read: Centre secures Rs 25,200 crore investment in PLI 2.0 for steel from 35 firms
In the first half of March 2025, FPIs offloaded Indian stocks worth $3.5 billion. The technology sector alone saw net outflows of $803 million, while consumer sector stocks faced $591 million in offloading. Since October 2024, foreign investors have withdrawn approximately $29 billion from Indian equities, marking the largest outflow in any six-month period.
A significant portion of these funds is being redirected to China, where the Hang Seng Index in Hong Kong has surged by 36% since late September. According to a Reuters report, AI-driven investments, particularly in Chinese tech venture DeepSeek, have been a major factor in attracting foreign capital. This marks a notable shift in investment patterns, with foreign investors increasingly favoring Chinese equities over Indian markets over the past six months.
The Chinese stock market has emerged as an attractive alternative due to relatively lower valuations and expectations of an economic rebound. Despite ongoing trade tensions spurred by US President Donald Trump's tariff policies, China's pro-growth measures and stimulus efforts have enticed global investors.
In a significant development, Britain's Aubrey Capital Management now has a greater portfolio allocation in China than in India, marking a shift after nearly two years. Rob Brewis, a portfolio manager at Aubrey Capital, noted that profits accumulated from India's strong market performance in previous years have now been reallocated to China, Southeast Asia, and other regions.
The Indian stock market's downturn has been fueled by concerns over rising inflation, high interest rates, and a slowdown in corporate profits. The economic growth rate for FY 2025 is projected to be the lowest in four years, further dampening investor sentiment. The decline in market valuation has resulted in a staggering $1 trillion wipeout in market capitalization.
Also read: Experts: Digitisation, reforms, inclusion key to India's GDP doubling in 10 years
Despite the outflows, some experts remain optimistic about India's long-term market prospects. Investment firms like Morgan Stanley and Fidelity International, while reducing their Indian holdings, have not abandoned the market entirely. Meanwhile, a recent stock market rally has provided a glimmer of hope.
Over the last five trading sessions, Sensex and Nifty have staged a recovery, with the BSE Sensex rising over 4%. This rally has added Rs 22.12 lakh crore to equity investors' wealth, pushing the total market capitalization of BSE-listed firms to Rs 4,13,30,624.05 crore.
subscribe to Asianet Newsable WhatsApp channel by clicking here.