Key points
- Over $1 trillion wiped from Indian benchmark since September
- Foreigners pull $29b from Indian stocks since October
- When China gets flows, India doesn’t: expert
ISLAMABAD: Over the last six months, global investors have rapidly pulled out of India’s stock market, chipping nearly 13 per cent off its stocks.
Investors are selling shares at a record pace to buy Chinese stocks instead, in a dramatic reversal of fortunes for the Asian giants, according to Reuters.
The trend is beginning to test the resolve of its loyal retail traders who have supported the market for months amid an exodus of global funds.
Inflows into domestic mutual funds have slumped about 30 per cent from October’s record high, and the influx of new entrants into the market has slowed to hit a two-year low, according to Bloomberg.
Prolonged rout
Those are just some of the signs that individual investors, a key force behind a pandemic-era world-beating rally, are wavering as they are caught up in their first prolonged rout.
“When China gets flows, India doesn’t,” Jitania Kandhari, deputy chief investment officer of the solutions and multi-asset group at Morgan Stanley Investment Management told Reuters.
Foreigners have pulled nearly $29 billion out of Indian stocks since October, the most in any six-month period, as they turn their backs on a market most investors had embraced for a couple of years, the British news agency reported.
Quote:
“When China gets flows, India doesn’t.” – Jitania Kandhari, deputy chief investment officer at Morgan Stanley Investment Management
That money has fled to China, where Hong Kong’s benchmark Hang Seng Index, home to many major Chinese companies, is up 36 per cent since late September, drawn by bets on artificial intelligence spurred by Chinese startup DeepSeek.
“Cautious about India”
Nitin Mathur, associate investment director at Fidelity International, said the firm has been more cautious about India than in the past, reducing its exposure “a little bit”.
China’s stock market has proved an unlikely sanctuary from the trade war unleashed by US President Donald Trump, as it is relatively cheap and seen poised on the cusp of an economic recovery.
Before the steep selloff in Indian stocks over the past six months, investors had scrambling to keep up with the strong performance that carried its valuation to eye-watering levels.
But slowing corporate earnings and an economy seen growing in the current financial year at the slowest pace in four have hurt sentiment, investors say.
