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The ongoing <keyword id="20168812" type="General" weightage="20" keywordseo="sell-off" source="keywords">sell-off</keyword> by <keyword id="19900795" type="General" weightage="20" keywordseo="foreign-investors" source="keywords">foreign investors</keyword> continues to loom large on <keyword id="19991358" type="General" weightage="20" keywordseo="Indian-markets" source="keywords">Indian markets</keyword>. In October so far, <keyword id="19950996" type="General" weightage="100" keywordseo="FIIs" source="keywords">FIIs</keyword> (foreign institutional investors) have already withdrawn Rs 74,732.20 crores. Not for a single day this month have FIIs poured money into <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>. The sell-off started on October 1, when foreign investors withdrew Rs 5,579.35 crore. The highest withdrawal of this month came on October 3. 2024, when FIIs sold Rs 15,243.27 crore worth of assets. Yesterday, i.e. on October 17th, FIIs pulled out Rs 7,421.40 crore from the markets. Experts state that FIIs are continuously putting pressure on Indian stocks, but the situation is expected to improve in the coming weeks with a sharp recovery anticipated. "We remain optimistic as the FII selling may have crossed the half way mark already and as it tones down, the domestic flows will help a recovery. When the recovery happens it will sharp and concentrated, giving long term investors motivation to stay put during the harrowing volatility of a roller coaster market that has repeatedly tested support levels but remains oversold, hence ripe for a bounce sometime in the next few weeks" said Ajay Bagga, Banking and Market Expert to ANI. Between January and October 2024, foreign investors have invested a net of 1,87,298 crore in India. This year, apart from the current sell-off, January, April and May also saw <keyword id="23593694" type="General" weightage="20" keywordseo="investment-outflows" source="keywords">investment outflows</keyword> by FIIs. The intense selloff comes right after September, when foreign investors invested a record Rs 93,538 crore in the Indian markets. June, July and August 2024 had also seen positive inflows from foreign investors of about Rs 41,757 crore, Rs 48,796 crore and Rs 25,493 crore respectively. However, a resilient, strong domestic investor base is keeping Indian markets afloat. <keyword id="21714171" type="General" weightage="20" keywordseo="DIIs" source="keywords">DIIs</keyword> (domestic institutional investors) have been consistent buyers throughout this month, largely balancing the outflows prompted by FIIs. In October so far, DIIs have invested about Rs 68,961.37 crore in the market, with the highest monthly inflow coming in on October 7th. While DIIs invested Rs 13,245.12 crore in Indian markets on that day, foreign investors withdrew Rs 8,293.41 crore. Yesterday i.e. on October 17, 2024, DIIs invested Rs 4,979.83 crore in the markets. At present, experts note that DIIs are flush with cash at the moment, with <keyword id="20052797" type="General" weightage="20" keywordseo="mutual-fund-inflows" source="keywords">mutual fund inflows</keyword> reaching an all-time high of Rs 24,509 crore in September 2024, a record 52.78% jump from the corresponding year ago period, where they stood at Rs 16,042 crore. Generally, keeping around 3-5% of their assets in cash is considered an acceptable practice amongst mutual fund houses. As per reports, mutual funds are currently in possession of Rs 1.86 lakh crore worth of cash, which constitutes 5.03% of their total AUM as of September 2024.

Exodus of foreign investors from Indian markets continues unabated in October. But DIIs are holding the fort steady

<ul class="summary-list"><li>ETF inflows have taken off in the last week or so, as have stocks.</li><li>Strategists, including BlackRock's Gargi Chaudhuri, are optimistic about the economy.</li></ul>Investors have <a target="_blank" href="https://www.businessinsider.com/how-to-invest-trump-win-election-stock-market-outlook-strategy-2024-11">poured money into the market</a> at an unprecedented pace since <a target="_blank" href="https://www.businessinsider.com/donald-trump-wins-presidential-election-race-2024-11">Donald Trump's victory</a>, though a veteran investment chief believes there's much more than politics at play.Inflows into exchange-traded funds (ETFs) have shattered the record set in 2021 with more than a month and a half to spare, according to asset management titan BlackRock. The world's largest ETF issuer recently noted that $77 billion went into ETFs in the week after the election, which had never happened before. That surge coincided with the S&amp;P 500's best week of 2024.Markets were especially euphoric <a target="_blank" href="https://www.businessinsider.com/stock-market-outlook-trump-president-economy-tariffs-trade-war-kelly-2024-11">immediately after election day</a>. An astounding $22.3 billion went into US ETFs last Wednesday, and BlackRock's uber-popular iShares Russell 2000 ETF (<a target="_blank" href="https://markets.businessinsider.com/etfs/ishares-russell-2000-etf-us4642876555">IWM</a>) had its most active day of trading and inflows since 2007 as small caps soared by 5.8%.However, BlackRock's Gargi Chaudhuri doesn't think President-elect Trump deserves all the credit for this astounding market rally. The chief investment and portfolio strategist, Americas noted in a recent interview that US stocks <a target="_blank" href="https://www.businessinsider.com/stock-market-rally-outlook-trump-win-investing-strategy-2025-page-2024-11">had several strong catalysts</a> before Trump's win."Obviously, there have been some pretty sharp movements over the course of the last week," Chaudhuri told Business Insider. "But even as we look back to the quarter before that or since the beginning of this year, I think there have been some very solid fundamentals that have underpinned this movement."Robust growth for the economy and corporate earnings are some of the most salient market drivers, as are lower interest rates and receding inflation, Chaudhuri said. End-of-year rallies are also very common, <a target="_blank" href="https://www.businessinsider.com/stock-market-outlook-history-yearend-rally-election-trump-harris-truist-2024-11">especially in strong years for the market</a>, as Truist recently remarked.Another convincing explanation for this recent market momentum is that investors had reduced risk as uncertainty mounted ahead of the election before quickly changing course when they got clarity on the path forward sooner and more decisively than anticipated."Investors bringing down their portfolio risk going into elections was perhaps one of the reasons that we have seen this pretty strong re-risking in markets, especially after we got the election results," Chaudhuri said.<h2 id="e1cf1135-8543-44c9-9cf9-a679564fb91f">Why softer economic readings are a red herring</h2>As the new year approaches, Chaudhuri is rather confident about the US economy, even though a few recent developments seem to have given the glass-half-empty camp some ammunition.GDP growth and job additions have slipped lately, though neither is a major cause for concern for Chaudhuri. The economy <a target="_blank" href="https://www.businessinsider.com/gdp-gross-domestic-product-third-quarter-economy-2024-10">didn't expand as much as expected in the third quarter</a>, but GDP still rose <a target="_blank" href="https://tradingeconomics.com/united-states/gdp-growth">at a healthy clip of 2.8%</a>. And a <a target="_blank" href="https://www.businessinsider.com/october-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-11">weak October jobs figure</a> appears to be largely due to the severe weather events that disrupted thousands of workers.Besides, more modest growth is a sign that the economy isn't overheating, which is welcome news to the Federal Reserve in its quest to ease financial conditions without reviving inflation. Such moderations aren't giving Chaudhuri pause about the trajectory of the US economy."It would be very normal for us to continue to see a further normalization in the labor market, given how strong the economy has already been, how high rates are," Chaudhuri said.The investment chief added: "We haven't really seen that job destruction taking place quite yet. You're still seeing wages rising; you're not seeing layoffs pick up in a meaningful manner."Corporate earnings growth is arguably the most compelling reason to stick with US stocks following what's been another outstanding performance this year. Profits <a target="_blank" href="https://www.businessinsider.com/stock-market-rally-outlook-trump-win-investing-strategy-2025-page-2024-11">jumped about 7% in the third quarter</a>, which is well above the <a target="_blank" href="https://www.businessinsider.com/how-to-invest-q3-earnings-season-recession-risk-investing-strategy-2024-10">mid-single-digit figure that analysts were banking on</a>."One of the things that the equity market has done over and over again is continue to surprise us in terms of earnings growth," Chaudhuri said. "I think companies have continued to find very innovative ways to manage their expenses. They've found a way, especially given the spend on AI, the type of CapEx that's going into finding ways to make companies have more productivity."<h2 id="1bb5d4ad-c973-49dc-9ddc-4fb0e9f732a3">Where to invest in a rosy 2025</h2>Two sectors with abnormally strong earnings prospects are financials and industrials, Chaudhuri said. These economically sensitive groups enjoyed some of the larger post-election pops as <a target="_blank" href="https://www.businessinsider.com/how-to-invest-trump-win-election-stock-market-outlook-strategy-2024-11">Wall Street puts its chips on sectors that should benefit from a hot economy</a>.And although <a target="_blank" href="https://www.businessinsider.com/cheap-stocks-to-buy-strong-growth-market-outlook-garp-bmo-2024-10">smaller stocks have been on a heater</a>, Chaudhuri believes that large, undervalued companies are the better place to be, given their superior earnings setup."For a longer period of time, large cap is where we think the earnings growth is going to continue to be higher and better," Chaudhuri said.While earnings may not be under the microscope like they were when interest rates were at their peak, they're still top of mind for Chaudhuri. Larger stocks often have better earnings than their smaller peers, and the investment chief thinks that the cream will eventually rise to the top."This catch-up trade that's happening in small caps right now has a little bit of legs," Chaudhuri said. "I think that can continue, maybe 'til the end of this month or even the end of next month."Chaudhuri continued: "But for us to believe in sustained rallies in small caps, we would need to see earnings growth, and over 50% of the small-cap index still is not very profitable."

BlackRock's Gargi Chaudhuri shares how to invest as ETF inflows soar to records ahead of a promising 2025

India could see a shift in foreign direct investment (FDI) trends in the second term of Donald Trump (Trump 2.0) as President of the United States, says a research report by the State Bank of India. The report highlighted that under his first term, Trump 1.0, the Trump administration made sweeping regulatory changes aimed at attracting investments back to the U.S., which impacted FDI inflows globally, including India. It added that if similar policies are reintroduced in Trump 2.0 also, it could create challenges for emerging markets like India, which rely on FDI as a significant driver of economic growth. Notably, a recent Kotak report highlighted that a complete Republican control over all arms of the US government would mean increased US earnings via corporate tax cuts, higher tariffs on imports into the US and greater US fiscal deficits. The first two could spell doom for emerging markets like India and China, since foreign investors will make a beeline for investing more money in the US markets, which will come at the cost of intense selloff in emerging markets. However, higher fiscal deficits will eventually lead to the dollar weakening after the initial euphoria dies down. "India may see shifts in foreign direct investments (FDIs) during Trump 2.0. The Trump 1.0 administration saw significant regulatory changes aimed at attracting investments back to the US," the SBI report stated. However, given that India has been gradually diversifying its sources of FDI (foreign direct investments), this trend could serve as a buffer against any potential decline. Moreover, domestic institutional investors have been stepping up big time, maintaining some balance to the massive exodus of FIIs over the past month. So far in November 2024, FIIs have withdrawn Rs 19,849 crores from the cash segment in Indian markets, while DIIs have poured in Rs 14,014.18 crores as of November 10th, 2024. "India is no longer dependent on the traditional sources of FDI inflows... unlike the recent past, FDI is now coming in many new sectors," noted the SBI report. Unlike a decade ago, when most FDI inflows came from a limited number of traditional sectors, India is now attracting investment in a wide array of industries, including renewable energy, sea transport, medical devices, and surgical appliances. Data suggests over the last 24 years, i.e., between April 2000 and June 2024, FDIs have poured in $1,013.4 billion in the Indian economy. Out of this, 67%, i.e., $689.88 billion, has come in just the last 10 years. The report added there are up to 12 emerging sectors showing strong FDI interest, which could help offset any loss of inflows in conventional sectors if there is a shift in global investment patterns under another Trump administration. In the last financial year, the top 5 sectors that have received the highest quantum of FDI inflow include the services sector (finance, banking, insurance, and business) which makes up about 16% of the inflows. This is followed computer software &amp; hardware, which constitute around 15% of total FDI flows. Trading and telecommunications follows with a share of 6% each, and Automobile Industry comes next with a 5% share. In the short term, the potential for increased U.S. tariffs, more restrictive H-1B visa policies, and a stronger dollar could bring some volatility to India's trade and investment landscape. However, in the long term, these challenges might also encourage India to expand its manufacturing capabilities, diversify export markets, and focus on becoming economically more self-reliant. Notably, India has maintained a merchandise trade surplus with the U.S. despite tariffs imposed during Trump's first term. This indicates that Indian exports have remained resilient, and there is potential to strengthen this trade relationship further by capitalizing on emerging sectors and reducing dependency on traditional industries. Suman Chowdhury, Executive Director &amp; Chief Economist, Acuité Ratings &amp; Research Limited cautions that in the medium to long term, the trade relationship with the US may see a structural improvement. "Higher tariff and trade restrictions in the US with China should translate into better opportunities for exports of manufactured goods from India", he adds.

FDIs may shift to US under Trump 2.0 but it is unlikely to severely impact FDIs inflow to India, says SBI Report

The government's decision to remove <keyword id="22142879" type="General" weightage="20" keywordseo="indexation-benefit" source="keywords">indexation benefit</keyword> on sale of old property will result in huge <keyword id="22544904" type="General" weightage="20" keywordseo="inflow-of-black-money" source="keywords">inflow of black money</keyword> in <keyword id="19895040" type="General" weightage="100" keywordseo="real-estate" source="keywords">real estate</keyword> and investments in the sector will go down, AAP Rajya Sabha member <keyword id="19934326" type="General" weightage="20" keywordseo="Raghav-Chadha" source="keywords">Raghav Chadha</keyword> said on Thursday. Asking the government to roll back the proposal, Chadha, while taking part in the discussion on the <keyword id="19908389" type="General" weightage="20" keywordseo="Union-Budget" source="keywords">Union Budget</keyword> 2024-25, said people will never be able to buy their "dream homes". "Restore indexation on <keyword id="20584761" type="General" weightage="20" keywordseo="long-term-capital-gains" source="keywords">long-term capital gains</keyword>. Throughout the world, to woo investors to invest they are incentivised. In this country, by removing indexation we are disincentivising the investor class," he said, adding that removing indexation is not imposing <keyword id="19987671" type="General" weightage="20" keywordseo="tax" source="keywords">tax</keyword> but it is equivalent to "penalising investors". He said as a result of the step proposed by <keyword id="19956758" type="General" weightage="20" keywordseo="Finance-Minister" source="keywords">Finance Minister</keyword> Nirmala Sitharaman in the Budget 2024-25, individuals selling old properties will incur higher tax outgo. "If you do not bring back indexation three things will happen in this country. First, <keyword id="19895437" type="General" weightage="20" keywordseo="investment" source="keywords">investment</keyword> in real estate will go down and people will never be able to buy their 'dream homes'," Chadha asserted. He further said there will be undervaluation of property deals, people will buy properties at 'circle rates' and will never disclose the real value of the property. "Third, there will be a huge inflow of <keyword id="20592248" type="General" weightage="20" keywordseo="black-money" source="keywords">black money</keyword> if you don't roll back this decision to withdraw indexation," he said. In the Union Budget 2024-25, the government proposed reducing the long-term capital gains tax on immovable properties to 12.5 per cent from 20 per cent, but removed the indexation benefits to adjust for inflation. As per the Memorandum to the Union Budget, with rationalisation of rate to 12.5 per cent, indexation available under Section 48 of the Income Tax Act has been proposed to be removed for calculation of any long-term capital gains, which is presently available for property, gold and other unlisted assets. Chadha also highlighted the high tax burden faced by common people and asked for a comprehensive review of both direct and indirect taxes. "We impose taxes like the Europeans do, to get services like sub-Saharan countries," he added. Taking part in the discussion, Debashish Samantaray of the BJD said the central government has given a raw deal to all eastern states like Odisha, Jharkhand, West Bengal in the Budget. He charged that in spite of Odisha giving 20 seats to the BJP, there was hardly anything for the state in the Union Budget. He noted that "regional aspiration should be addressed", and asked the central government to treat all states as equal. RJD's Sanjay Yadav attacked the government stating the Budget had nothing for the poor and marginalised and only catered to the rich and powerful. He noted that his party has been demanding special category status for Bihar for a very long time. Yadav said instead of dividing people on the basis of religion and caste, the government should work towards generating employment in the country. Medha Vishram Kulkarni of BJP and Rajani Ashokrao Patil of INC also participated in the debate. C V Shanmugham of AIADMK said allocation in the Budget does not significantly address the pressing needs of Tamil Nadu's infrastructure, health care, Social justice and education. The government has mentioned 76 projects in Tamil Nadu, but most of them are pre-existing ones getting a facelift. Moreover, in the Budget, no help in flood mitigation was provided, despite the state being prone to cyclones. There is no mention of a linkage of Kaveri and Godawari in the Budget, he said. Samirul Islam of AITC said this Budget is anti-people, anti-poor and anti-Bengal. It only satisfies Bihar and Andhra Pradesh's allies and is to save the government. "The Budget has deprived Bengal," he said. It has also ignored the people, especially the unorganised sector. 83 per cent of India's workforce is employed by unorganised sectors and failed to announce a comprehensive scheme for them and migrant workers, he said. M Mohamed Abdulla of the DMK said the Budget has provoked a constructive debate and disappointment in Tamil Nadu, a state known for its economic contributions. Tamil Nadu expected support and recognition in the budgetary allocations, but received nothing. The government is supposed to represent the people of the country as a whole. However, it is very unfortunate and unfair to see unequal distribution to the state governments, especially for the non-BJP ruled states like Tamil Nadu which provides the highest tax for the government, he said.

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Exodus of foreign investors from Indian markets continues unabated in October. But DIIs are holding the fort steady

Ira Alok Puranik

BlackRock's Gargi Chaudhuri shares how to invest as ETF inflows soar to records ahead of a promising 2025

James Faris

FDIs may shift to US under Trump 2.0 but it is unlikely to severely impact FDIs inflow to India, says SBI Report

Ira Alok Puranik

Removal of indexation benefit will lead to huge inflow of black money in real estate: Raghav Chadha

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