The Indian stock markets have seen a continuous outflow of money over the last two months, with Foreign Institutional Investors (FII) selling their holdings. Initially, this money was redirected to Japan, and then to China.
China’s major stimulus measures prompted a significant shift in FII allocation from India to China. Just as this trend began to stabilize, gold prices have surged, and Indian midcap shares are struggling.
The market rally in 2023-24 led many to believe they were great investors, with some even quitting their jobs to focus solely on capitalizing on the market. However, it’s time to face reality—the party is over, at least for this year.
Here are some key reasons:
- BRICS has evolved from an economic forum to a political one, with aspirations to make the world bi-polar or multi-polar—an idea not favored by four of the world’s largest economies.
- The push for alternative currencies to the US dollar will undoubtedly disrupt the current trading system.
- Israel has become increasingly belligerent, with recent attacks on Iran likely to impact the stock market come Monday.
- The upcoming US elections are expected to be contentious. Indian markets will likely gain direction only after U.S. policies, particularly regarding the Federal Reserve rate cuts and visa policies, become clear. The Indian IT industry will be especially affected.
- The second-quarter results of Indian companies so far have been underwhelming.
The West’s efforts to decouple from China have largely failed, and even de-risking strategies have fallen short. If Trump returns to power, Elon Musk—who has significant investments in China—will likely resist any move to impose the Patriot Act, which could penalize investments in China.
In conclusion, it’s time to take home your profits and cut your losses before it’s too late.
(Author is a Post Graduate from Indian Institute of Foreign Trade)
