Record foreign exodus casts pall over India's stock market

Global funds pull out $13 billion, driving benchmark index towards technical correction

Foreign investors are souring on India's stock market, selling a record amount of shares amid signs the South Asian nation's post-pandemic economic boom is losing steam.

Global funds pulled out more than US$10 billion (S$13 billion) on a net basis in October, helping drive the benchmark stock index towards a so-called technical correction.

Sustained foreign investor outflows could act as a drag on near-term stock performance, according to Citigroup.

The past few years have seen India emerge as a preferred investment destination, thanks to its breakneck economic growth, surging corporate profits and a broader shift away from China.

But some of that shine is now starting to fade as equity valuations have become among the priciest in the world, the pace of expansion in the economy and earnings is slowing, and Chinese stocks are staging a comeback following a stimulus blitz since late September.