Indian stocks have experienced heavy foreign outflows in October, with overseas investors pulling over $7 billion, marking the most significant withdrawal since March 2020. Every trading session this month saw net sales, reflecting a shift in sentiment as China draws investor attention with new stimulus measures.
Foreign funds sold Indian equities throughout October, resulting in total net outflows of more than $7 billion through October 14, according to Bloomberg. If this trend persists, it may become the biggest selloff since the record-breaking exit during the pandemic’s early days.
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The rotation of funds to China, spurred by multiple stimulus initiatives, drained liquidity from other Asian markets, including India. Despite this, local investors have stepped in, purchasing nearly $7.2 billion worth of stocks in the same period, helping cushion the outflow impact.
Sentiment towards Indian stocks is shifting. The number of market bulls now matches bears, a marked decline from July when optimism outstripped pessimism by 32 percentage points. This change suggests a neutral stance on Indian equities among investors.
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While local buying has limited the damage, the shift towards China and the fading enthusiasm for Indian stocks are indicative of changing preferences among global investors, potentially impacting Indian market performance in the coming months.
