As per data available from NSE, FIIs have net sold stocks to the tune of Rs 19,000 crore so far in January. Over the last four months, starting  October 2024 they have offloaded shares worth Rs 1.97 lakh crore. But the question is why are the selling stocks? There are many reasons to this.

One is the impact of globalization. Indian stock markets are linked to the markets and economy of other countries like the USA and the China. If economic situations in these countries improve, then many of foreign investors dump Indian shares and invest in these markets. Hence Indian markets fall. Few months ago, Chinese stocks were found attractive due to cheaper valuations. it led to Indian investors and FIIs moving towards Chinese markets, leading to a fall in Indian markets. Now strong US macroecnomic data is shifting Investors towards USA.

Recently US’s job report was released which shows a strong US jobs situation. The recent data shows that US has added 256,000 jobs in December where as the expected number was 160,000. The unemployment in the US is also down to 4.1%. It also means a higher domestic demand in the US economy which in turn means high production and high GDP. This has attracted investors towards US over India. As a result dollars has also become stronger. Which has weakened currencies of other countries. The rupee has fallen to it’s lowest level of rupees 85 per dollar.

Moreover the uncertainty about upcoming President Donald Trump's economic strategies such as protectionism measures have intensified bearish sentiments in India. He has been announcing tariffs on products from countries like China, Canada and groups like BRICS and others. The continued sanctions on Russia would also impact India as the import of cheap Russian crude would decline affecting prices in India. And there is no surprise if he imposes some tariffs on selective Indian products as well. His inauguration is scheduled for January 20, 2025.

Further, The Indian economy's growth is projected to slow to a four-year low of 6.4 per cent in 2024 -25. The Q3 data for Indian industries have been disappointing. Since then the investors have been fleeing from India. Experts suggested that volatility will persist in the near term and that stock markets could fall further. Domestic markets might remain weak until March, with stability expected from April as earnings outlooks improve and FII selling subsides.

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