Vikrant Shekhawat : Jan 10, 2025, 04:22 PM
Share Market News: Selling trend has dominated the domestic stock market this week. The market movement appeared quite sluggish, with a continuous up and down trend. The market opened in the red on Friday as well, although it came in the green after some time. At the time of writing the news, the Sensex was trading with a decline of 0.30%.The market has been witnessing a stir since the beginning of this week. Especially the emergence of new cases of HMPV virus and the selling by foreign investors have affected the market. Investors' caution was also seen due to the quarterly results of companies and the upcoming budget. Foreign investors have withdrawn an investment of Rs 17,000 crore from the market in the first seven trading days of January 2025. In this article, we will discuss the three major reasons due to which foreign investors are keeping distance from the Indian market.1) Decrease in incomeThe Indian stock market has been witnessing a decline in the income of companies for the last two quarters. This has weakened the confidence of foreign investors. Due to the continuous decline in the profitability of companies, investors are not seeing any reason to stay in the market. According to reports of brokerage firms, income growth is likely to remain in single digits in FY 2025. This situation is not attractive for investors, due to which they are withdrawing their investments.2) Weak fundamentalsWeakness in the fundamentals of the Indian economy is also affecting foreign investors. India's GDP growth forecast for FY 2025 has been reduced. It is estimated to decline to 6.4% in FY 2025 as compared to GDP growth of 8.2% in FY 2024. This figure is also lower than the Finance Ministry's forecast of 6.5% and RBI's forecast of 6.6%. The weak GDP growth rate is increasing the concerns of investors, due to which they are staying away from the Indian market.3) Increase in bond yieldAnother important reason for the distance of foreign investors from the market is the increase in bond yield. The US Treasury's 10-year benchmark yield has reached 4.73%. Experts believe that the Federal Reserve will maintain the possibility of cutting interest rates in January, which will keep the dollar strong. The strength of the dollar will lead to an increase in bond yields, which will pull investors from the Indian market to more attractive US bonds.Way forwardInvestors should be cautious in view of the current selling environment in the Indian market. Market experts believe that budget-related announcements and quarterly results of companies in the next few weeks will determine the direction of the market. Along with this, the interest rate situation in the global market and the movement of the dollar can also affect the Indian market.Despite the selling by foreign investors, long-term investment opportunities remain in some sectors. Experts advise that investors should focus on investing in companies with strong fundamentals and keep an eye on global economic indicators.