MUMBAI: In the run-up to the Budget and amid heavy selloff in Adani Group stocks, foreign funds have taken out a little over $2 billion, or about Rs 17,300 crore from the Indian market in three trading sessions. The fall in Adani stocks —that have seen over $67 billion or about Rs 5. 6 lakh crore being wiped off their combined market capitalisation since January 24 — also dragged down India’s market valuation by nearly $150 billion.
As a result, India’s market cap as a share of global market cap also fell to 3. 1% from 3. 6% last year, Bloomberg data showed. As India’s market cap dropped to $3. 2 trillion, the country is now the sixth in the list of countries with the biggest market cap, slipping behind France. In 2022, as India’s stock market had remained stable amid a global rout and gained a marginal 4% compared to 20-30% fall in some major markets, it was the fifth largest by market cap.
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However, the recent rout in the domestic market has now relegated it to below France and just $100bn ahead of the UK, Bloomberg said.
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The crash in Adani Group shares, which also dragged down the Indian market for at least two days, came following a scathing report by aUS-based short seller Hindenburg Research that alleged corporate fraud and stock manipulation in the group’s companies. Several clarifications and rebuttals of the report by Adani Group also didn’t help the stock prices much, market players said.
On Tuesday, Adani Total Gas’s stock price lost the maximum possible 10%, while Adani Power and Adani Wilmar lost 5% each, also the day’s limit. All other group stocks gained between 1% and 3%, a reversal from the recent sessions when all the stocks had closed deep in the red.
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As the market focussed on the Adani-Hindenburg controversy, foreign investors net sold stocks, taking the monthly selloff figure for January to over Rs 30,000 crore, data from CDSL and BSE showed. In comparison, in December these investors had net bought Indian stocks worth Rs 11,100 crore.
The net outflow figure for FY23 is now closer to Rs 45,00 crore, official data showed. If foreign portfolio investors (FPIs) do not turn net buyers in two months to more than make up for the net outflow so far in the last 10 months, FY22 and FY23 would be the first two-year period for foreign funds to turn net sellers in India, CDSL data since 1998-99 showed. The heavy selling by FPIs is also putting pressure on the rupee, market players said.
