The different approach that retail investors are taking for themselves from foreign investors is noteworthy. Small investors – those investing up to Rs 2 lakh in a company’s equity capital – turned net sellers in the three months ended June 30, cutting stake in 253 out of 439 Nifty 500 companies, according to stock exchange data. The selloff came despite the market rallying 14% from its March lows. On the other hand, foreign portfolio investors made net purchases of Rs 1.03 trillion during the quarter, helping the market break out of its near-20-month range. This divergence is in stark contrast to the earlier phases when domestic buying was driving Indian stocks, while foreign investors were cashing out. While the latter seems attracted by India’s economic fundamentals and prospects, domestic investors may be in a profit-booking mood even as weak corporate earnings in some sectors act as a deterrent for stock buying. Broadly speaking, the trend shows that there is a fair balance of foreign and local participants in our stock markets. And as long as buying interest persists, Indian markets will remain under selling pressure. Of course, earnings must also grow in order to justify the valuation.
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UPDATE: July 25, 2023, 12:02 AM IST