नमस्कार मित्रों!
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Indian stock market has been one of the worst performers over the last two years. The NSE made its peak in 2024 and then fell sharply. After making top near the 26,000 level that year, and also touching it in this year, it went down. Now it is hovering near 23,000. The decline has been continuous, but 23,000 is not only a strong technical support, it is also a psychological support level. The index dipped around 1.6% last Thursday but still held the 23,000 level and even bounced from this level on Friday. So far, this remains a crucial support zone for the market.
On one hand, FIIs are continuously selling, while DIIs are absorbing that selling. Thanks to the steady inflow from SIP investors, market is not falling sharply. Several factors are dragging the Indian market down and one of the most important is persistent FII selling. Foreign investors are showing little interest in Indian equities. They are pulling money out of India and investing in other markets.
Rising U.S. bond yields are also causing outflows. FIIs prefer the secure returns offered by U.S. bonds, especially when the Indian market is underperforming. Their logic is simple - why take risk in a market that isn’t delivering returns?
The falling Indian Rupee is another concern. Currency depreciation erodes FIIs' profits, meaning they may end up with losses after converting their gains back into dollars.
The Indian government has also increased several taxes related to investing, such as long term capital gains tax and securities transaction tax. This further squeezes profits and even causing losses to some people.
Even Indian companies are hesitant to invest domestically. They are willing to invest abroad but not in India, largely due to unstable policies and frequent regulatory changes that make business planning difficult.
Overall, the situation is bad and it could get worse. The Middle East crisis and rising crude oil prices are also contributing to FIIs exit. Let’s hope these conditions improve soon and we may see a rise from here. But for this, tax reforms and removal of hurdles are necessary.
Thanks!