Indian stock market Indis, Sensx and Nifty have come down significantly from lifetime high. Investors have lost several lakh crore rupees in market reforms and foreign portfolio investors are now withdrawing money for several months.
Foreign portfolio investors continued their migration from Indian stock markets in early March and also showed concerns about economic situations in both the United States and India, with adequate sales in the areas of information technology and consumer goods.
In the first half of March 2025, FPI sold $ 3.5 billion to pure Indian shares. While the technology sector has seen a net of $ 803 million, consumer sector shares have experienced an offloading of $ 591 million. Foreign investors have withdrawn about $ 29 billion from Indian equity since October, marking the largest outflow over a period of six months.
Fortnightly FPI flow
Where and why foreign investors are shifting their money?
This money has moved towards China, where the Hang Seng index in Hong Kong has increased by 36% from the end of September. A Reuters report stated that the Chinese enterprise has resulted in income as a result of artificial intelligence investment centered around Deepsek.
Foreign investors are transferring their investment to Chinese equity at an unprecedented rate from India – which is a major change in investment patterns between these two major Asian economies in the last six months.
Roll Reversal: Indian stock struggle as an increase in China shares
- The Chinese stock market has emerged as an unexpected safe shelter. It comes amidst trade stress due to the US President
Donald Trump The tariff moves. This innings is mainly due to China’s relatively low evaluation and anticipated economic growth. China’s support for development focuses on policies and excitement, which has attracted the interests of investors. - After a period of two years, China has crossed India in terms of portfolio allocation in Britain’s Obre Capital Management. Portfolio manager Rob Bruz told Reuters, “Profits have been discontinued by Indian Stock for the last few years. Some of them have gone to China, some in Southeast Asia and other places.”
Due to the concerns of CPI inflation and high interest rate scenario, Indian shares have come down drastically from their peaks seen in September. This has eliminated $ 1 trillion in market capitalization from the Indian stock market. The investor’s spirit has been negatively affected by the recession in the company’s profits and the slowdown in the sluggish economic growth, which is expected to be the lowest in four years during FY 2025.
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Despite maintaining overweight space over India, Morgan Stanley and Fidelity International have reduced their Indian holdings by increasing their Chinese investments in recent months.
But all this is not as foggy as it looks. Market experts have expressed confidence in the long -term possibilities of the Indian economy and its markets.
Indian stock market on the route of recovery?
However, below his peaks, the Indian Equity Benchmark Indege BSE Sensx and Nifty 50 have staged a smart comeback in the last five days. The assets of equity investors have increased by Rs 22.12 lakh crore during the five -day stock market rally, with more than 4%BSE sense. According to PTI, the total value of BSE-list firms increased by Rs 22,12,191.12 crore, which reached Rs 4,13,30,624.05 crore during this period.
FII This year, the US Federal Reserve has shifted from its sales trend to become a pure buyer affected by the adjustment signals, which indicate a decrease in potential dual rate this year. Vinod Nair, Head of Research of Geologet Financial Services, said, “It has ruled out optimism in the domestic market.”
Siddharth Khemka, Head – Research, Motilal Oswal in Financial Services states that Nifty has recovered 6.3% in the last three weeks, indicating to buy value at lower levels. “We hope that to continue this up speed, amidst the attractive evaluation and signs of economic reforms for foreign institutional investors with the return to the Indian market,” he said.
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India vs China: Historical returns and future prospects
Analysts say that while the Chinese stock market has performed well due to the recent measures of excitement, Indian stock markets have seen better returns over the years.
Indian markets have defeated Chinese markets 16.71% in 5 years and 8.07% in 3 years time limit. “It highlights the strong performance of the Indian market, which makes it an attractive option for long -term investment,” says Dutta, the product of Nand Rathi Wealth Limited’s product research.
Another interesting fact is that Indian markets have shown continuity in performance with positive returns in the last six years. While the Chinese stock market has been more unstable, it records negative returns over a few years. “This suggests a high risk associated with the Chinese market compared to the Indian market,” Anand Rathi Dutta of the wealth explains TOI.
“FII has placed its small positions at 85% short posts in February 2025, and now we are looking at a reversal signs. Historically, whenever the small posts of FII have reached 85%, emotions have moved, indicating a possible tendency change.
India Stock Market – Long -term story intact!
Many investors maintain their trust in India’s capacity. Amidst the ongoing global uncertainty, India will remain the world’s fastest growing major economy, the IMF has predicted. In the third quarter recently, the RBI has cut the repo rate in the recent 6.2% GDP growth and February policy review indication that the worst slowdown for the Indian economy has ended. Additionally, while the global markets are concerned about the impact of the mutual tariff of US President Donald Trump, experts mention that India is relatively untouched and less exposed.
“One of the best economic backgrounds of major markets is one of the best economic backgrounds of major markets, which has a lot of economic drivers as well as stock market support,” is said by Reuters.
A report called ‘India Equity Strategy and Economics’ recent analysis of Morgan Stanley confirms the country’s strong long -term approach, with his feeling indicator suggests an opportunity to purchase a hypnotic purchase in Indian equity.
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Ridam Desai, equity strategist at Morgan Stanley, says, “There is not a possible positive change in the basic things in the price – we hope that India will fix the lost ground against its colleague group through the rest of the 2025.
This maintains its Sensex target of 105,000 marks for December 2025. Morgan Stanley noted that India’s earnings growth trajectory is showing trend upwards, even with consensus estimates. He has recognized India as a ‘stock picker’ market ‘.
“The market has ignored the RBI policy axis and a strong budget from the government, among other positive developments since the beginning of February. India’s low beta feature makes it an ideal market for an uncertain macro environment that are working with equity. Importantly, our emotion indicator is in a strong purchase field,” reported in the report.
According to Nabnita Dutta of Anand Rathi Wealth, India has an estimated growth rate of 6.6% for FY25 with a GDP growth capacity that crosses 4.8% of China for CY24. “It keeps India more favorablely, highlights its strong economic approach. Market evaluation looks appropriate with no major foam in Indian equity markets. We can expect that the Nifty 50 is expected to give CAGR of 11-13% in the medium period, given the approach to strong macroeconomic and earning development,” she is expected to give CAGR of 11-13%, “she says.
Talking about the potential impact of mutual American tariffs under Trump’s administration, she says, “Today, US imports 10.5% from China, while India only represents 2.5% American trade. Since the US imports about 15% of its goods from China, it will have a significant negative impact on China. It is likely to increase any tariffs.
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