India savours the power of the domestic bid
In previous years, the outflow of foreign portfolio investment that characterized the first seven months of the year in India would have caused a market collapse. This time, it didn’t. The difference: Indian retail finding its voice.
In the first seven months of 2022, foreign investors shunned Indian securities markets. By June, foreign portfolio investors had sold Rs2.08 lakh crore ($26 billion) of Indian equities, according to the National Securities Depository.
By early August, when the tide appeared to turn, foreign portfolio investors had pulled out $30 billion from the Indian markets overall since the markets turned in late 2021, by far the worst figures since the global financial crisis.
But there is a big difference. As recently as five years ago, an outflow like that would have crashed the Indian stock markets. That hasn’t happened.
“In 2008, in the GFC, when foreign investors pulled out about $20 billion in three months, markets crashed, far more significantly than in the US,” says V Jayasankar, head of equity capital markets at Kotak Investment Banking.