Indian Stocks Post Historic Losing Streak as Global Funds Flee #IndiaFinance

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The selloff in Indian equities marked another grim milestone, with the benchmark index declining for a record 10th straight day amid continuous selling by overseas investors.

The NSE Nifty 50 Index fell 0.2% on Tuesday, extending a drop from the September peak to 16%. Global funds have led the selloff, pulling nearly $14 billion this year, driven by concerns about slowing economic growth and relatively high valuations.

“Investors are rattled,” said Daljeet Singh Kohli, head of equities at Roha Asset Managers, an alternative investment fund. While the bulk of the negatives have been factored in, sentiment has taken a beating, he said.

The shift in sentiment for Indian equities has been swift, considering that the South Asian nation was a favorite among most emerging-market fund managers as recently as September. A rebound in Chinese stocks and a resurgent dollar have further dimmed the appeal of Indian assets.

The Nifty 50 has nearly unwound all of the gains seen in a 16% surge that vaulted it to a 2024 peak in the aftermath of the nation’s general elections that ended in May. The slide is now taking a toll on sentiment, particularly among young and relatively new retail investors who have not experienced a significant market downturn in the past five years.

The share of small investors in cash equities on the National Stock Exchange of India Ltd. hit a nine-month low in January, according to exchange data.

“Two out of three investors in India are new and have not witnessed a bear market before,” Herald van der Linde, an Asia strategist at HSBC Holdings Plc. wrote in a note. “This poses a risk to the sustainability of domestic flows, especially if the market remains weak.”

Still, recent government measures to boost consumption, along with efforts to negotiate a bilateral trade agreement with the US to avoid tariffs are expected to support stocks. Also, oversold technical indicators and declining demand for hedges among traders point to a potential near-term rebound in domestic equities.

Citigroup Inc. upgraded local stocks to overweight last month, citing “less demanding” valuations, while JPMorgan Asset Management Ltd.’s Portfolio Manager Julie Ho told Bloomberg Television that she sees value in Indian lenders and real estate investment trusts.

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