Business News: India’s Market Cap Drops By $1 Trillion, FII Withdrawals and Global Factors Impact Investments

Business News: Retail investments boomed last year as the stock market peaked, attracting even inexperienced investors. However, as 2024 came to a close, market conditions began to deteriorate, owing principally to the ongoing withdrawal of assets by Foreign Institutional Investors (FII). Furthermore, global economic issues, such as the influence of former US President Donald Trump’s executive orders and the sinking rupee, exacerbated market volatility. Initially viewed as a short-term correction, the downturn has already lasted five months, with over Rs 2 lakh crore withdrawn since October. India’s market value has decreased by $1 trillion, with mid-cap and small-cap equities experiencing a 20-25% loss. 

China Witnesses Strong Growth

Not only has India’s stock market fallen, but so have those of other emerging economies such as Thailand and the Philippines. In contrast, China’s market has shown persistence in the face of economic challenges, including a collapsing real estate industry that the Chinese government is attempting to boost up with economic measures. While US policies continue to hamper China’s economy, its stock market remains robust, valued at nine times earnings compared to India's valuation of 24 times earnings. Despite a six-fold fall, India’s market retains a premium valuation, raising questions about whether the collapse will continue or end.