(March 4): The selloff in Indian equities is approaching another grim milestone, with the benchmark index poised for a record 10th straight day of decline amid continuous selling by overseas investors.

The NSE Nifty 50 Index fell as much as 0.7% Tuesday, hitting its lowest level in nine months and extending a drop from the September peak to 16%. Global funds have been leading the selloff, pulling nearly US$14 billion (RM62.57 billion) this year, driven by concerns about slowing economic growth and relatively high valuations.

“Investors are rattled,” said Daljeet Singh Kohli, head of equities at Roha Asset Managers, an alternative investment fund. While the bulk of the negatives have been factored in, sentiment has taken a beating, he said.

The shift in sentiment for Indian equities has been swift, considering that the South Asian nation was a favourite among most emerging-market fund managers as recently as September. A rebound in Chinese stocks and a resurgent dollar have further dimmed the appeal of Indian assets.

The prolonged selloff has started to take a toll on individual investors, who have remained resilient during post-pandemic market declines. Their share in cash equities on the National Stock Exchange of India Ltd hit a nine-month low in January, according to exchange data.

Still, recent government measures to boost consumption, along with efforts to negotiate a bilateral trade agreement with the US to avoid tariffs are expected to support stocks. Also, oversold technical indicators and declining demand for hedges among traders point to a potential near-term rebound in domestic equities.

Citigroup Inc upgraded local stocks to overweight last month, citing “less demanding” valuations, while JPMorgan Asset Management Ltd’s Portfolio Manager Julie Ho told Bloomberg Television that she sees value in Indian lenders and real estate investment trusts.

Weak corporate earnings and the still-elevated valuation premium to emerging market peers have seen India fall out of favour with fund managers. MSCI’s India benchmark is currently exhibiting the weakest earnings revision momentum among the region’s major developing markets, according to data compiled by Bloomberg Intelligence.

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