Resilient Indian Markets Withstand Record FII Outflows

Despite unprecedented foreign investor withdrawals totaling Rs 1,05,000 crore in October, the Nifty 50 index declined only 6.5%. Domestic investments and primary market activities have provided significant support, stabilizing the Indian markets against global volatility and signaling resilience amidst external pressures.

In a dramatic turn of events, October has witnessed foreign institutional investors (FIIs) withdraw a staggering Rs 1,05,000 crore from Indian markets. Despite this unprecedented outflow, the Nifty 50 index has shown remarkable resilience, registering only a 6.5% decline during the month.

This FII exodus marks a record high in absolute numbers. However, financial experts highlight that this withdrawal represents merely about 1% of FIIs' total investments in India, which account for approximately 16% of the NSE's market capitalization. Ajay Bagga, a noted Banking and Market Expert, emphasized the continued strength of domestic investment flows as a stabilizing force preventing sharper market corrections.

Comparisons with past downturns, like the March 2020 plunge of 23% due to COVID-19 uncertainties, underscore October's relative mildness. The market's resilience is bolstered by robust domestic investor participation and significant primary market activities. IPOs and FPOs have generated Rs 17,000 crore in October alone, further cushioning the setbacks from foreign sell-offs, thereby highlighting the robustness and evolution of India's equity market against a backdrop of global instability.

(With inputs from agencies.)