After remaining net sellers during the previous two sessions, foreign investors sold another $1.82 billion in stocks on Thursday, according to provisional stock market data. While FPIs offloaded $621.4 million worth of shares on October 1, the last trading day of September saw them sell $767 million worth of shares.
Thursday’s sale also saw India lose the tag of largest flow of foreign money into emerging markets. So far in 2024, South Korea has attracted the largest inflows, amounting to $10.3 billion. On the other hand, India’s figure so far this year fell to $8.6 billion, according to Bloomberg data.
As traders flock to the Chinese market to participate in the continent’s stock rally, India has seen some weakness. Additionally, there were media reports suggesting FPI’s displeasure over the Securities and Exchange Board of India’s (SEBI) plan to impose restrictions on derivatives trading.
Following the announcement of the stimulus package, sentiment towards Chinese stocks has seen a dramatic shift. The benchmark CSI 300 index rose 27% in just nine sessions through September 30.
According to market participants, money has started flowing into China to become part of the excellent performance. Harish Krishnan, co-CIO and head of equities at Aditya Birla Sun Life AMC argued that we are seeing some normalization in the market. “A huge amount of money is now going to China,” Harish added. He also said corporate profits haven’t improved much over the past two quarters.
As a result, the valuation of most Indian stocks is above their historical averages. While the benchmark Nifty50 index trades at 21.6 times its one-year earnings versus its five-year average PE of 19.1 times, Korea’s Kospi trades at 8.5 times its one-year earnings.
That compares with China’s CSI 300 index, which has a valuation of 13.4 times even after the latest rise. The Nifty50 lost 547 points, or 2.1%, on Thursday to record its biggest single-day drop in two months.
(Edited by: Ajay Vaisnav)
First published: October 3, 2024 9:32 pm IS
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