Domestic institutional investors are on track for their biggest monthly exodus from Indian stocks in two-and-a-half years, another warning sign on the longevity of the record rally in the $3.7 trillion market.
(Bloomberg) — Domestic institutional investors are on track for their biggest monthly exodus from Indian stocks in two-and-a-half years, another warning sign on the longevity of the record rally in the $3.7 trillion market.
Local funds, insurers and banks have sold a net $1.1 billion worth of shares so far in July, the most since February 2021, according to data compiled by Bloomberg. Domestic institutions were substantial net buyers from December through March but have mostly treaded water since then.
Foreign investors meanwhile have been net buyers of nearly $14 billion worth of Indian stocks this year, overtaking local funds as the primary driver of the world’s fifth-largest equity market. That’s helped the NSE Nifty 50 Index rally 17% from a recent low in March to a series of new all-time highs.
While global institutions remain bullish on the outlook for Indian shares thanks to a robust economy and corporate earnings, local fund outflow may be seen as a reason for wariness. Technicals and options data are flashing caution, and some small-cap stock funds have been forced to suspend taking fresh investments amid record inflows.
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