NIFTY News & Analysis
4 articles
Market Mood
India's Stock Market Sinks, FX Withdrawals Hit $40bn in 2026
India's economy remains robust with a growth rate exceeding 7%, yet its stock market faces challenges in 2026. Despite the economy's resilience to global disruptions, the Sensex and Nifty indices have struggled, marking the longest losing streak in 25 years. The Nifty index specifically saw small increases after eight successive weeks of declines, resulting in a 15% erosion in wealth for domestic investors this year. Meanwhile, South Korea's Kospi index gained 62% for investors since January, exacerbating the contrast. Foreign institutional investors have withdrawn approximately $40 billion from Indian markets over the past two years, leading to an overall net-zero investment return over the past decade. The influence of domestic funds growing to $900 billion has mitigated sharper declines, yet the market remains stressed by high inflation and a weak job market. Contributing to market stress, crude oil prices between $90 and $100 a barrel continue to negatively impact India's economy. This prolonged situation exacerbates inflationary pressures and affects company earnings and margins. Hari Shyamsunder from Franklin Templeton Asset Management India noted that prices above $100 create financial strain. Approximately half of India's oil imports come through the Strait of Hormuz, which has witnessed eight months of shipping disruption. In addition, potential tariffs from the United States on countries trading with Russia add further complications. For ordinary investors, this is crucial because it highlights risks from external fiscal factors and energy dependency impacting market returns. Understanding these elements can guide decisions regarding asset allocation and expectations of market behavior.
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Foreign Investors Sell $26 Billion in Indian Large Caps
Global brokerage Bernstein reported that foreign portfolio investors have sold $1.7 billion of Indian equities in September 2023, leading to a total of nearly $26 billion sold this year, the highest on record. The Nifty 50 index, representing large caps, has declined over 10% since January 2023. Bernstein noted that many large corporates are struggling to adapt to new technologies, limiting their growth potential and deterring foreign investment. Investors may want to pay attention to the performance of mid-cap and small-cap companies, which have shown stronger earnings growth of 31% for the June quarter compared to 11% for Nifty 50 companies (NSE:NIFTY).
Read More: Foreign Investors Sell $26 Billion in Indian Large Caps
Indian Stocks Rally Tested as Oil Surges Amid US-Iran Tensions
Crude oil prices have increased significantly due to renewed tensions between the US and Iran, which raises concerns for Indian stocks. This geopolitical situation influences oil supply, impacting inflation and market dynamics in India. The sharp increase in oil prices could affect the overall earnings of companies reliant on energy. Investors may see volatility in the Indian stock market as these factors unfold, potentially impacting indices like Nifty 50 and Sensex.
Read More: Indian Stocks Rally Tested as Oil Surges Amid US-Iran Tensions
Japan (NIKKEI) Stocks Rise 1.2% Amid Iran Conflict Developments
Japan's Nikkei 225 index increased by 1.2% and the Topix rose by 0.6% as investors reacted to geo-political tensions regarding Iran. The rise comes amid a backdrop where President Trump issued threats against Iran over its failure to reopen the Strait of Hormuz, a vital oil passage. Meanwhile, the Kospi in South Korea gained 0.8%, while India's Nifty 50 fell by 0.5%. Asian markets faced mixed performances overall due to various public holidays across the region, contributing to market volatility.
Read More: Japan (NIKKEI) Stocks Rise 1.2% Amid Iran Conflict Developments