Foreign Investors’ Sell-Off Impacts NSE Market Cap in October
In October, foreign investors have been selling off their shares, causing a significant drop in the market value of companies listed on the National Stock Exchange (NSE) in India. The market capitalization fell from Rs 470 lakh crore in September to Rs 433 lakh crore by October 24, losing over Rs 37 lakh crore.
Foreign institutional investors (FIIs) sold more than Rs 1 lakh crore worth of equities in October. This shift is a change from September when FIIs were buying Indian stocks. Several global factors, such as geopolitical tensions and rising crude oil prices, have contributed to this trend, affecting investment sentiment.
The NSE noted that the strong performance of the Chinese market, following stimulus measures, has led to some foreign portfolio investment (FPI) moving from India to China. Despite the challenges in October, the Indian market has seen significant growth over the past six months, with a 22.5% increase in market capitalization from April to September 2024.
The market cap-to-GDP ratio reached 150% by the end of September 2024, the highest in over 20 years, showing the growing importance of Indian stocks in the economy. The number of companies listed on the NSE has also increased, from 422 in FY96 to 2,559 by August 2024, leading to a more diverse market.
Mid-cap and small-cap companies have performed well over the last decade, reducing the Nifty 50 index’s share of total market capitalization. Akshay Chinchalkar, Head of Research at Axis Securities, mentioned that historically, the 44th week of the year often sees market gains, with an 80% chance of ending higher based on a 10-year analysis. However, due to recent FPI outflows and global uncertainties, investors remain cautious about the near-term performance of the Indian market.
Doubts Revealed
Foreign Investors -: Foreign investors are people or companies from other countries who invest money in India’s stock market to buy shares of Indian companies.
Sell-Off -: A sell-off happens when many investors sell their shares at the same time, which can cause the prices of those shares to go down.
NSE -: NSE stands for National Stock Exchange, which is a place where people can buy and sell shares of companies in India.
Market Cap -: Market cap, or market capitalization, is the total value of all a company’s shares of stock. It shows how big a company is in the stock market.
Geopolitical Tensions -: Geopolitical tensions are problems or conflicts between countries that can affect the economy and stock markets around the world.
Crude Oil Prices -: Crude oil prices refer to the cost of unrefined oil, which is important because it affects the price of many goods and services, and can influence the stock market.
Rs 470 lakh crore -: Rs 470 lakh crore is a way to express a very large amount of money in Indian currency, where ‘Rs’ stands for Rupees, and ‘lakh crore’ is a way to count large numbers in India.
