India Slips to Third Place in MSCI Emerging Markets Index Amid Sell-Off
Global Funds Extend Record Selling Streak in D-Street Stocks to 22 Days


Last Updated: 5th February 2025 - 03:01 pm
Global asset managers have continued their record-breaking sell-off of Indian equities, driven by concerns over a worsening earnings slowdown and a broader shift away from emerging markets.
According to Bloomberg data, foreign investors have offloaded Indian stocks for 22 consecutive trading sessions as of Monday, surpassing the previous record set in March 2020. On Monday alone, they sold a net $416.5 million worth of local shares, bringing total outflows during this period to approximately $9 billion. This sell-off persisted despite the federal budget announcement on Saturday, which introduced over $11 billion in tax cuts.
Citigroup Inc. strategist Surendra Goyal noted that foreign investors’ positioning in Indian equities is at its lowest in 15 years. While continued outflows may affect short-term market performance, he emphasized that the budget remains favorable for economic growth.

Since the end of September, foreign investors have withdrawn more than $21 billion from Indian stocks, contributing to a decline of over 9% in the NSE Nifty 50 Index from its all-time high last year.
Several key factors are driving this prolonged selling spree by global asset managers. One of the primary concerns is the slowing earnings growth of Indian companies, which has raised doubts about future stock market returns. With corporate profit margins under pressure and economic uncertainties looming, investors have become increasingly cautious about holding Indian equities.
Additionally, the global macroeconomic environment has played a significant role. A stronger U.S. dollar, rising bond yields, and expectations of prolonged higher interest rates in developed markets have led investors to shift their focus toward safer assets. As a result, emerging markets like India have witnessed capital outflows as foreign investors seek higher returns in less volatile markets.
Geopolitical tensions have also contributed to this trend. Ongoing conflicts, supply chain disruptions, and concerns over global economic stability have made investors wary of riskier assets. With India being a key player in the emerging market space, any global uncertainty tends to trigger foreign fund withdrawals.
The massive foreign outflows have had a direct impact on Indian equity indices. The NSE Nifty 50 Index has fallen significantly from its peak, erasing a large portion of last year’s gains. Sectors that were previously favored by foreign investors, such as technology, financials, and consumer goods, have seen sharp declines in stock prices.
Despite this, domestic investors have provided some support to the market. Mutual funds and retail investors have continued to invest in equities, helping to offset some of the selling pressure from foreign institutions. However, whether this domestic inflow can sustain market stability remains uncertain.
While the short-term outlook remains uncertain, experts believe that India’s long-term growth story is still intact. The recent federal budget, which includes tax cuts and policies aimed at boosting economic activity, is expected to provide some relief. Additionally, India’s strong domestic consumption and expanding middle class continue to make it an attractive investment destination.
Market analysts suggest that if global conditions stabilize and earnings growth rebounds, foreign investors could return to Indian equities. However, for now, the market remains vulnerable to external shocks, and investors may need to brace for continued volatility.
- Flat ₹20 Brokerage
- Next-gen Trading
- Advance Charting
- Actionable Ideas
Trending on 5paisa
Indian Market Related Articles
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.