In recent months, the Indian stock market has faced a sharp decline, leading to reduced confidence among foreign investors. Since October 2024, the Indian stock market has lost over one trillion dollars in market value.
Foreign Investors Selling Indian Stocks
Foreign investors have been selling Indian stocks for the last five months, and this trend has not stopped. Since October 2024, they have withdrawn nearly 37 billion dollars from the Indian market. In February 2025 alone, Foreign Institutional Investors (FIIs) sold shares worth 34,574 crore rupees. This raises an important question: where are these investors moving their money?
Foreign Investors Turning to China
A new trend has emerged among foreign investors: “Sell in India, Buy in China.” As a result, while the Indian stock market continues to decline, the Chinese market has shown strong growth. Reports indicate that since October 2024, India’s market capitalization has decreased significantly, while China’s market capitalization has increased by nearly two trillion dollars. Let’s explore why foreign investors are investing in China’s stock market.
China’s Strong Comeback
China’s stock market has made a strong recovery in recent months, attracting foreign investors. The Hang Seng Index in Hong Kong has surged by 16% in one month, whereas India’s Nifty index has dropped by over 2%. Chinese companies, such as Alibaba and Lenovo, have shown strong earnings growth and lower valuations, making them attractive to investors.
China’s New Policies
China has recently introduced policies to attract foreign investment, focusing on sectors like telecommunications and biotechnology. The government has announced measures to expand market access, reduce financial restrictions, and create a fair business environment. These initiatives have encouraged investors to consider China as a favorable investment destination.
Continuous Decline in Indian Stock Market
The ongoing decline in the Indian stock market has led to a lack of confidence among investors. Since October 2024, the Indian stock market has lost over one trillion dollars in market capitalization, while China has gained two trillion dollars in the same period. This uncertainty is driving investors away from India.
China’s Belt and Road Initiative
China’s Belt and Road Initiative (BRI) has strengthened its global economic influence. This project has attracted over 679 billion dollars in infrastructure investments across 150 countries. The initiative has encouraged investors to deepen economic ties with China and recognize its critical role in the global supply chain.
Strength of the U.S. Market
Additionally, the U.S. market’s strong economic growth and rising treasury yields have attracted foreign investors. A stronger U.S. dollar has also played a role in shifting investments away from emerging markets like India. Investors expect better returns in the U.S. market, making it a more attractive option compared to the Indian stock market.
As foreign investors continue to withdraw from India and invest in China and the U.S., the Indian stock market may face further challenges in the coming months.
