Stories
Finance Minister explains market weakness despite strong Indian economy
- •Finance Minister Nirmala Sitharaman stated that foreign investors are easily withdrawing investments from India due to high liquidity and finding ready buyers.
- •Foreign capital is being redirected towards the US and Artificial Intelligence related companies in countries like Taiwan and South Korea, impacting Indian markets.
- •Foreign Portfolio Investors have sold Indian equities worth over 33 billion dollars this year, and continuous capital outflow could be a major challenge by 2027.
- •Despite heavy selling by foreign investors, strong domestic investments through mutual funds, SIPs, and institutional buyers are providing a crucial cushion to the market.
- •Sitharaman emphasized the need to develop economically self-reliant urban centers by combining government investment, development finance, and private capital.
Key Questions Answered
Finance Minister Nirmala Sitharaman explained that high domestic liquidity in India makes it very easy for foreign investors to withdraw their investments and find buyers. Furthermore, they are pulling out money to redirect it toward other options, such as the US and artificial intelligence-related companies in markets like Taiwan and South Korea.
Despite heavy selling by foreign portfolio investors, domestic investments are cushioning the pressure on the market. Equity mutual fund net inflows reached a five-month high in September with strong contributions into mid-cap and small-cap funds, alongside steady growth in Systematic Investment Plans (SIPs) which have recorded consecutive monthly net inflows.
Sitharaman emphasized developing cities that are economically self-reliant and capable of attracting investments by combining government spending, improved financial health of urban local bodies, development finance, and private capital. Better coordination among these sources is required to increase funding for cities and water infrastructure for long-term development.
