The domestic markets Sensex and Nifty corrected themselves resembling approximately 8% within the previous few days. The prominent reason behind this correction is the net outflow of Foreign Institutional Investors. The NSE data states that foreign investors sold equities worth Rs. 13.7 crores against the acquisition of Rs. 9 crores across NSE and BSE. this implies the online FPI/FII investment was a negative Rs. 4.7 crores. This can be proof that foreign investors are taking the cash out. However, we don’t think it’s a matter of concern. Let us travel back in time a small amount to understand this in a better way.
In 2019, FII inflows stood at $14.2bn. 2020 was the second year in a row when the foreign money inflow into Indian equities was the very best among emerging markets. The Indian equities attracted over $23bn from foreign institutional investors last year. the massive influx of investments helped both Sensex and Nifty grow around 80% from the lows of 23rd March 2020. The broader markets participating in the race to beat the benchmark indices. Nifty mid-cap and small-cap grew over 100% last year.
This means FIIs made lots of cash through Indian equities. And now they’re booking profits and taking some money off the table. As Indian markets shine highly valued, FIIs are slightly shifting to cheaper markets like China for the short term. The past few months were rough for the Chinese market. With time, as things have started settling down within the country after a series of state clampdowns and also the Ever Grande crisis, the Chinese markets became cheaper.
This doesn’t mean that the Indian markets have lost their charm. It’s the role valuation that’s playing at the instant and also the indisputable fact that foreign investors have made plenty of cash from Indian markets. The Indian government has been announcing a series of reforms on regular basis within the past few months like the National Monetization Pipeline, Retail Direct Scheme, disinvestment plans to call. We still must witness the advantages of presidency spending – whether it’s on infrastructure, roads, etc.
India is one of the fastest-growing economies in the world in terms of GDP growth, and company earnings will imitate. it’ll entice the FIIs to our stock markets again. MyFinopedia says the markets are hunting a consolidation phase. One must observe this situation as an intermission rather than a whole sellout by foreign investors.
The stock markets reward those who invest in fundamentally strong companies and remain patient. It’s not a game of roulette, where & how one said it and earn. Short-term correction and volatility are part and parcel of equity investments. Invest wisely at MyFinopedia with the guidance of an AMFI registered Investment planner.
