Under economic slowdown, the Indian stock market has "become expensive," with overseas investors net withdrawing $750 million in 2024
Due to concerns about the slowdown of the Indian economy and rising valuations, overseas investors net withdrew $750 million in 2024, leading to a dampened market sentiment. Although the Indian stock market has risen for the ninth consecutive year with support from domestic buying, the return rate is only 9%, underperforming its international peers. Factors such as high interest rates, weakening consumer enthusiasm, and a depreciating rupee have exacerbated market challenges. Analysts point out that changes in the Federal Reserve's policy may further impact foreign capital outflows
According to the Zhitong Finance APP, last year, concerns about the slowdown of the Indian economy and rising valuations hit market sentiment, leading overseas investors to net sell Indian stocks.
According to data compiled by Bloomberg, global funds sold off more than $750 million worth of Indian stocks in 2024, with significant sell-offs in October and November exacerbating the situation. Previously, as of the end of September, they had increased their holdings to approximately $12 billion.
Currently, high interest rates, a weakening consumption boom from the pandemic, and a weak rupee have intensified the negative factors facing the Indian stock market, which is undergoing significant challenges. Prashant Kothari, portfolio manager at Pictet Asset Management Ltd., who manages an Indian stock fund worth about $1 billion, stated, "In recent years, we have seen very good economic growth, but the outlook may be somewhat cloudy." He also added that the opportunities in India "are not enticing."
Driven by sustained domestic buying, India's benchmark NSE Nifty 50 index has risen for the ninth consecutive year in 2024, but the return rate is only 9%, appearing relatively lackluster compared to international peers. Nikhil Rungta, Chief Investment Officer of the equity division at LIC Mutual Fund AMC, stated that high stock valuations, profit pressures, and macroeconomic challenges have led to the underperformance of the Indian domestic stock market compared to some global counterparts.
Analysts believe that the Federal Reserve's slowdown in interest rate cuts may exacerbate capital outflows from developing countries like India, and the policies proposed by U.S. President Donald Trump will be a major influencing factor for emerging markets in 2025