Flls unlikely to return to India soon as China lures

Incremental foreign flows may stay with China in short to medium term: Analysts

- SIRALI ALOK GUPTA

The past five months have been challenging for the Indian stock market investors. The correction, which began in October 2024, has pulled benchmark indices - NSE Nifty and BSE Sensex - down 11 per cent and 12 per cent from their respective peaks. In the broader markets, the drawdown has been steeper with the Nifty Midcap index declining 16.36 per cent and the Nifty Smallcap index plunging 19.11 per cent.

According to analysts, a large part of this correction can be attributed to foreign investors, who have pulled the plug on Indian equities. Since October 2024, foreign institutional investors (FIIs) have sold Indian stocks worth ₹1.01 trillion. In February alone, they sold equities worth ₹23,710 crore. Notably, FIIs' withdrawal from Indian shores coincided with the Chinese government announcing various stimulus measures to revive the country's faltering economic growth.