look news india
Mumbai: The Indian stock market is expected to see the biggest withdrawal of foreign institutional investors (FIIs) in the last one year in the current month of May. Due to election uncertainties and high valuations, foreign investors are turning to cheaper stocks like China.
Due to the currently high valuations in India, FIIs have adopted a commodity selling strategy. So far in May, foreign investors have made net sales of about $3.50 billion.
According to a research report, FII outflow by the end of May is likely to be the largest since June 2023.
Investors believe that the performance of the BJP-led front in the Lok Sabha elections will not be as expected, resulting in important economic reforms not being taken forward.
Due to this uncertainty, foreign investors are currently exiting India's highly rated equities and looking towards China where commodities are now available at cheaper valuations.
The report said that the valuation gap between Indian and Chinese markets is so big that investors cannot ignore it. There is a flood of investors in the shares of technology sector companies in China.
Since China and India are the two largest emerging markets, foreign investors play between China and India. Another analyst said they sell in India and buy in China and sell goods in China and buy in India. Net short selling by FIIs in Indian equities is currently at the highest level since 2012.