Indian equities have been declining since September due to a slowing economy and a significant outflow of foreign investment. Sectors like real estate, energy, and autos have been hit the hardest. While some analysts view this as a healthy correction, others warn of continued underperformance in the near term.
Domestic sectors such as real estate, energy and autos have been the biggest decliners, data from Goldman Sachs showed.
"We think that will portend an underperformance in local equities relative to other major benchmarks," wrote Harry Chambers, assistant economist at Capital Economics. Foreigners remain net sellers of Indian equities, said James Thom, senior investment director at Abrdn. There has been a rotation out of India and emerging markets stocks into U.S. equities, Thom added."It's a sort of risk-adjusted view that can get a better, safer return in U.S. equities," Thom said."So why take the risk, so-called perceived risk with India?"
Profit booking involves selling a portion of an investment to secure gains after the asset has risen, rather than holding it indefinitely. Traders sometimes engage in profit booking when The quadrupling of domestic equity investors in India between 2020 and 2024 has led to a mini-bubble, which has been deflating since September, said Praveen Jagwani, CEO of asset management company UTI International.
INDIAN MARKET ECONOMIC SLOWDOWN FOREIGN INVESTMENT EQUITY CORRECTION DOMESTIC INVESTORS
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