Indian stock markets are losing their sheen as global funds exit. Here’s why
Foreign portfolio ownership of companies listed on NSE has tumbled to a 17-year low
Global investors are pulling out of the Indian stock market due to a lack of exciting investment options and lukewarm corporate earnings. Gerald Gan, chief investment officer at Reed Capital Partners, explained that there is no compelling narrative for investing in India, citing the slowdown in growth and the absence of an artificial intelligence investment theme.
The retreat from Indian equities has been significant, with foreign portfolio ownership treading a 17-year low. Foreign funds have withdrawn about $25 billion this year, leaving the Nifty 50 Index near its mid-2024 level. Indian equities trade at a 17.6 times forward earnings ratio, which is higher than their emerging market peers.
The NSE Nifty 50 Index commands a 77% valuation premium to MSCI's emerging-market benchmark, which has pushed foreign funds to seek opportunities elsewhere. Despite India's high economic growth rate and Prime Minister Narendra Modi's infrastructure initiatives, these factors are no longer enough to attract foreign investment compared to AI plays in South Korea and Taiwan.
Foreign fund managers are now calling for Modi to do more to lure back investors, emphasizing the need for jobs creation, manufacturing growth, and increased foreign direct investments.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
