Even though Indian markets are slowly bouncing back, foreign investors, known as FIIs, have been selling off stocks in early March. But there’s some good news: experts believe this selling is slowing down, which gives hope to Indian investors. If the US Federal Reserve helps out, we could even see a change in this trend.
In the first half of March, almost every sector was affected negatively, except for metals. Metal stocks actually gained ₹1,100 crore as investors poured money into this area, which is a big deal compared to previous times.
The sectors that faced the most selling from foreign investors include IT (Information Technology), FMCG (Fast-Moving Consumer Goods), Autos, Financials, and Healthcare. Overall, FIIs took out about ₹30,015 crore (around $3.5 billion) from Indian stocks during this time. IT stocks saw the biggest drop, losing ₹6,934 crore, leading to a decline of about 10% in the Nifty IT index over the last month.
The reasons for the selling in tech stocks are the high prices and worries about a possible US recession, which have made investors nervous. Until the economy stabilizes, these stocks may continue to be unpredictable.
Is a Turnaround Possible?
In the last six months, foreign investors have pulled out an amazing ₹3.4 lakh crore (around $28 billion) from Indian markets. This has happened despite the government lowering income taxes and the Reserve Bank of India cutting interest rates.
Meanwhile, Chinese stocks have been going up due to excitement over artificial intelligence developments, making foreign investors even quicker to leave India and invest in China instead.
However, there’s a new feeling in the market that the heavy selling might be coming to an end. For the first time in over a month, Indian stocks saw foreign investors buying again, reducing total outflows to around ₹24,000 crore this month.
Gautam Trivedi from Nepean Capital says that how the US market performs is really important to understand foreign investors’ actions in countries like India. Deven Choksey, a market expert, believes that prices are now reasonable after the drops, and a weak dollar is good news for Indian stocks.
Recently, the US Federal Reserve paused its interest rate hikes, and two cuts are expected this year. This situation makes emerging markets, like India, more attractive to foreign investors since US Treasury yields are lower. Experts say that if trends continue the way they are, we might see foreign investors coming back.
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