Foreign Outflows Impact Indian Market Amid Robust Economic Growth

Foreign institutional investors withdrew significant funds, yet India's overall economic growth remains robust. Key sectors like supply chain and mutual funds showed strong performance. The Indian stock market experienced turbulence due to external factors, including U.S. election results, impacting the rupee's value.

On Thursday, foreign institutional investors (FIIs) withdrew USD 770.67 million, marking significant equity, debt, and hybrid outflows. Equity outflows amounted to USD 440.86 million, while debt and hybrid categories saw USD 327.44 million and USD 2.31 million, respectively. Despite these withdrawals, FIIs have injected USD 18.241 billion in the calendar year 2024 and USD 8.924 billion in fiscal year 2025, according to an SBI research report.

The domestic economy remains robust with the supply chain sector achieving notable growth. E-way bill generation, an indicator of freight movement and economic activity, hit a record 117.25 million in October, up 17% year-on-year, signifying heightened business activity. Mutual funds in India witnessed growth, reaching a record share of 9.45% in companies listed on the NSE by September end, driven by a net inflow of Rs89,038 crore during the quarter.

India's vegetable oil imports are anticipated to decline to 15 million metric tons in 2024-25 due to favorable weather boosting domestic production. Palm oil imports may drop from 9.8 million to 9.2 million metric tons, while sunflower oil imports could rise from 2.9 million to 3.5 million. Market sentiment was affected by foreign withdrawal and the recent U.S. election results, with Donald Trump's re-election strengthening the dollar and impacting emerging market currencies.

The Indian stock market faced a downturn, with Sensex and Nifty 50 losing over 1% due to broad selling. This erased gains from the previous session. The rupee fell to an all-time low of Rs84.38 during the session, closing at Rs84.37, affected by local equity outflows and expectations of a stronger dollar post-Trump's election victory.

(With inputs from agencies.)