Global funds have pulled out Rs 1.54 trillion from domestic stocks in fiscal 2024 - 25 (FY25), the highest-ever outflow recorded so far, according to the data compiled by Business Standard. The last time the global funds exited Indian shores in droves was back in 2022, when they sold a net Rs 1.41 in the backdrop of Covid-19.
Retail investors have been the hardest hit in the recent market downturn, with stocks where they hold over 20% falling 45% from their 52-week highs.
Information technology (IT) stocks ended at their lowest in nearly nine months after a fresh bout of selling, triggered by concerns over a recession in the US, the key market for domestic software exporters. A report by Morgan Stanley citing risks to growth also weighed on sentiment.
Global fund managers witnessed one of their largest-ever declines in assets under custody (AUC) during the ongoing correction in the Indian markets, as stocks came under pressure from foreign outflows and the weakening rupee.
The risk-reward for the Indian markets, Morgan Stanley said, is turning favourable.
'This is also a time when you realise that short-term trading and dabbling in derivatives may result in financial losses.'
India's stock markets corrected recently but foreign money is likely to chase China rather than India in the short-to-medium term, said Chris Wood, global head of equity strategy at Jefferies, on Thursday. Wood told the Business Standard Manthan Summit in New Delhi he is bullish about Indian equities from a long-term perspective, but for the short term he is cautious given the quantum of foreign investor (FII) outflows and valuation woes.
The index could be vulnerable to a bigger fall given the present market dynamics.
Buying stocks during a dip, says Amar Nandu, research analyst, Samco Securities, can lead to higher compounding returns when the uptrend begins.
'I am more optimistic about India than before.'
'The pain can be more in the days ahead.'
'Selling could further intensify and take the index towards 22,800-22,750 in the near-term.'
'2025 is the year to build a portfolio for the future. Focus this year should be on valuations and visible growth.'
The last time these two indexes recorded a negative performance on a calendar year basis was in CY19.
India is among the three least-favoured Asian stock markets, according to BofA Securities whose survey found that 10 per cent of fund managers are underweight on Indian equities from a 12-month perspective.
'Geopolitics will be the most important driver of financial markets in 2025.'
From the outcome of the general elections and then Union Budget to tepid corporate earnings in the September 2024 quarter (Q2-FY25), sticky inflation and Reserve Bank of India's stance on interest rates, extreme weather conditions, Indian stock markets have braved it all in calendar year 2024.
Gold price outlook 2025: Gold prices that have climbed over 30 per cent so far in 2024 to Rs 7,300 per gram in the Indian markets (up 28 per cent in dollar terms till November-end), are set for their best calendar year performance in 10 years, suggests a recent report by World Gold Council (WGC). However, this stellar run, analysts believe, may not carry through till the end of 2025 in the backdrop of economic and geopolitical headwinds.
As regards mid-caps and small-caps, analysts suggest investors buy only those stocks of those companies where there is earnings visibility for at least a few quarters and where the valuations have become reasonable.
'To be able to sail through such volatilities, it is prudent to focus on quality.'
© 2026 Rediff.com - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances