Indian Stocks Near Record 10th Day Of Decline Amid Foreign Selloff

The ongoing selloff in Indian equities is edging toward a grim milestone, as the benchmark NSE Nifty 50 Index nears its 10th consecutive day of losses. On Tuesday, the index dropped by as much as 0.7%, reaching its lowest point in nine months. This marks a 16% decline from its peak in September, driven primarily by a massive outflow of foreign capital. Global investors have withdrawn nearly $14 billion this year, citing concerns over India’s slowing economic growth and high market valuations.

Daljeet Singh Kohli, head of equities at Roha Asset Managers, remarked that investor sentiment has been significantly shaken, despite most negative factors already being priced in. Once a darling of emerging-market investors, India’s appeal has swiftly faded, with a rebound in Chinese stocks and a strengthening dollar diminishing the attractiveness of Indian assets.

The sustained market decline is also impacting individual investors, who had previously shown resilience in the face of post-pandemic market downturns. Data from the National Stock Exchange of India reveals that their share of cash equities hit a nine-month low in January.

However, there are signs that the market may rebound in the near term. Government measures to boost consumption and efforts to negotiate a trade deal with the US to avert tariffs could provide support. Additionally, technical indicators suggest that the market may be oversold, while declining demand for hedges hints at a potential recovery.

Optimism from global financial institutions remains, with Citigroup upgrading Indian stocks to overweight last month, citing “less demanding” valuations. JPMorgan Asset Management’s Portfolio Manager, Julie Ho, expressed confidence in the value of Indian lenders and real estate investment trusts.

Yet, weak corporate earnings and India’s persistent valuation premium over emerging-market peers continue to weigh on investor sentiment. According to Bloomberg Intelligence, the MSCI India benchmark now shows the weakest earnings revision momentum among the region’s major developing markets.