NEW DELHI: Continued selling by foreign investors has led to a significant loss in market capitalisation on the National Stock Exchange (NSE) this October.
The data from the NSE reveals that over Rs 37 lakh crore has been erased from the market’s total valuation, with the market capitalisation of NSE-listed companies declining from Rs 470 lakh crore in September to around Rs 433 lakh crore by October 24.
The sell-off by foreign institutional investors (FIIs) marks a notable shift from September when FIIs were net buyers in Indian equities. According to NSE data, FIIs have sold equities worth over Rs 1 lakh crore in October alone, several global factors are driving the selling trend.
The NSE noted that the heightened geopolitical tensions have created uncertainty across markets, while the surge in crude oil prices has added to inflationary concerns, impacting investment sentiment in Indian stocks. It said “strong performance of the Chinese market after the announcement of stimulus measures, resulted in some shift in FPI capital from Indian to Chinese markets”.
While October has proven challenging for the NSE, the Indian market has experienced significant growth over the past six months. The NSE report highlighted that between April and September 2024, the market capitalisation of NSE-listed companies rose by approximately 22.5 per cent, translating to a robust compound annual growth rate (CAGR) of 20 per cent over the past 20 years.
This growth has also elevated the market cap-to-GDP ratio to 150 per cent as of the end of September 2024, based on a three-month rolling market cap and the latest nominal GDP figures. This is the highest this ratio has reached in over two decades, reflecting the increasing prominence of Indian equities within the broader economy.
The data also highlighted that the number of listed companies on the NSE has surged, rising from 422 in FY96 to 2,559 as of August 2024. This growth has led to a diversification of market capitalization, reducing the Nifty 50 index’s share of total market capitalization as mid-cap and small-cap companies have gained ground.
According to NSE “the relative outperformance of mid and small-cap companies over the last decade has also contributed in a meaningful manner”.
“The Nifty could attempt a bounce this week, according to historical patterns for the current week in seasonal data. This week is the 44th week of the calendar year, and a 10-year analysis starting from 2014 indicates that the market has ended higher 80 per cent of the time during this week, with an average gain of 1.4 per cent. In fact, the last time this week ended in the red was eight years ago in 2016”, said Akshay Chinchalkar, Head of Research, Axis Securities.
However, with the recent outflow of FPI and global uncertainties, market participants remain cautious regarding the future performance of the Indian market in the near term. (ANI)