The Morning Brief D-St Rout and FPI Exodus: Darkest Before Dawn?
Feb 13, 2025
Nishanth Vasudevan, ET’s markets editor, dives into the turmoil of India's stock market, which is facing its longest slump in years. He discusses the mass exodus of foreign investors and the significant decline in small- and mid-cap stocks. Nishanth also examines the reasons behind the record sell-off, including weak corporate earnings and global economic pressures. Is this downturn just a temporary blip or the start of a deeper decline? Tune in for insights on navigating current stock valuations and potential recovery strategies.
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Market Downturn Severity
- The Indian stock market is experiencing a severe downturn, with Sensex, Nifty, small-cap, and mid-cap indices all significantly down.
- This sell-off is the longest in the last five years and is particularly impactful due to India's underperformance compared to other emerging markets.
Reasons for Market Downturn
- FPIs have sold a record amount in the Indian stock market, impacting its performance.
- Factors contributing to this include India's high valuations, China's stimulus announcement, disappointing corporate earnings in India, and a strong US economy.
Impact of Trump's Tariffs
- Donald Trump's tariffs primarily target China, Mexico, and Canada, with limited direct impact on India.
- However, India will likely experience indirect impact through dollar movements and market sentiment.