In the current year, foreign investors have withdrawn more than Rs 1.60 lakh crore from the stock market.

Foreign investors have become disillusioned with the Indian stock market. In the entire month of December, there was not a single day when foreign investors made purchases in the Indian stock market. From December 1 till now, foreign investors have withdrawn their money. In the month of December, foreign investors have withdrawn more than Rs 25600 crore overall in 16 days between 1st and 16th December. Out of which more than Rs 17 thousand crores have been withdrawn from the stock market alone. In fact, due to falling rupee prices, they are not getting the returns they want. Due to the strong dollar, they are getting good returns in the American market. That's why they are withdrawing money from India and investing it in foreign markets.

However, there are other reasons for foreign investors to go out of India. In which there is 50 percent tariff imposed on India by Trump. Due to which the sentiment towards India has deteriorated at the global level. However, the export data for the month of November has forced the whole world to change its thinking. On the other hand, the delay in trade deal with America is also weakening the sentiment of foreign investors.

At the same time, experts say that the stock market still remains overvalued. Due to which profits are being booked by foreign investors. At present the stock market has been kept under control by the investments of domestic investors. Due to which the decline is not as big as it could have been. Finally, there is one more important reason. That is the increase in demand for safe haven.

At present the global economic conditions are not good. Because of which investors are turning towards safe haven. There is an increase in demand for gold and silver. Due to which the prices of both precious metals have reached record levels. Let us try to understand these reasons in detail and also look at the data related to profit booking by foreign investors.

Understand the indifference of foreign investors from statistics

The indifference of foreign investors has been seen throughout the year. This is the 8th month when foreign investors have withdrawn money from the stock market. So far in these eight months, foreign investors have withdrawn Rs 2,14,200 crore from the stock market. However, foreign investors have also invested Rs 53,283 crore in four months. This means that if investment and profit booking is adjusted, foreign investors have withdrawn Rs 1,60,917 crore from the stock market.

If we talk about the current month, investors have booked profits of Rs 17,242 crore. Whereas on Tuesday, foreign investors had withdrawn Rs 2,381.92 crore from the stock market. In such a situation, you can understand how deep and deep is the indifference of foreign investors. The special thing is that in the year 2024, foreign investors had invested a little more than Rs 400 crore in the stock market. Whereas more than Rs 1 lakh crore was invested in the debt market.

Why are foreign investors angry with Indian market?

1. Rupee decline: In the current year, there has been a decline of 6 percent in the rupee against the dollar. The rupee is trading above Rs 90 against the dollar. Whereas a day earlier, the value of one dollar had gone much higher than Rs 91 and had created a record of new life time low. Experts believe that the fall in rupee reduces the returns of foreign investors. Because of which foreign investors are reducing investment in India, or withdrawing their money.
2. Trump Tariffs: Ever since US President Donald Trump has imposed tariffs on India, there has been a lot of negative sentiment about India. Earlier the American tariff on India was only 25 percent. After that, America imposed 25 percent tariff on Indian oil on buying Russian oil. Due to which the total American tariff on India increased to 50 percent. Which was the highest tariff compared to any country in the world at that time.
3. Delay in trade deal with America: The trade deal between India and America had started when Trump announced tariffs on the world in April. Since then, more than 6 rounds of talks have taken place between the two countries regarding the trade deal. Even after that no consensus could be reached between the two countries. In fact, America wants to enter India's agriculture sector. On which Indian officials are not agreeing. This is the reason why foreign investors are not towards India.
4. Overvalued Stock Market: Even though the stock market has not given the same returns in the current year, the Indian stock market is still trading at the level of 85 thousand. Experts say that foreign investors still consider India's indices overvalued. Because of which they are continuously busy in making profits. Whereas the truth is that the Indian stock market is controlled by the retail investors of India. At the same time, foreign investors are busy earning money by investing in IPO instead of secondary market.
5. Demand for safe haven: Geopolitical tension has not ended yet in the world. The war between Russia and Ukraine now appears to be Europe versus Russia. Apart from this, global economic uncertainty still persists. Because of which foreign investors are investing in gold and silver instead of investing in emerging markets. Along with physical, we are also turning to ETFs. Recently there was news that silver has become the 5th largest asset in the world. In the current year, gold has given 70 percent return to investors and silver has given more than 120 percent return.

What are the experts saying?

According to Anuj Gupta, Director of Ya Wealth Global Research, profit booking by foreign investors can continue until a trade deal is made between India and America and 50 percent tariff on India is reduced. Due to which the rupee is also continuously falling. He said that due to the delay in the trade deal, the sentiment among foreign investors is very bad. Apart from this, the demand for gold and silver i.e. safe haven is highest among foreign investors. This is also the reason why profit booking by foreign investors is being seen in the Indian market.