In the midst of concerns about foreign institutional investors (FII) withdrawing from Indian markets, the World Bank has reaffirmed its confidence in India’s economic trajectory. Speaking to the Assam 2.0 Business Summit advantage, the Director of the World Bank, Auguste Tano Kouame, rejected concerns about short -term fluctuations, calling India “brilliant light in the world” and Undering global investors to capitalize on its growth.
“We are not worried about the growth of India for the moment. We are very optimistic about India and we will remain optimistic,” said Kouame, adding that minor variations in growth rates do not have impact on the situation as a whole. “If someone worries recent data, we would like to say that you don’t worry. India is brilliant light in the world. If you are looking to invest, then come and invest here. Indian growth makes it the place to invest. »»
Investors’ concerns in the middle of market sales
Kouame’s remarks occur at a time when the FIIs have left the Indian stock market, triggering a significant slowdown in the Sensex and Nifty. Since October 2024, global investors have withdrawn nearly 2 ₹ Lakh, leading to a drop of more than 10% of the Sensex. The wider clues were struck stronger, the BSE Midcap lowering by 19% and BSE Smallcap by retreating 21% during the same period.
The sale continued in 2025, with FII discharging nearly 1 lakh share of share in just 33 negotiation sessions until February 14. This trend is not exclusive to India because most of the main emerging markets (except Thailand) have also been negative Witnesses FII flows. According to Kotak Securities, India, Brazil, Indonesia, Malaysia, the Philippines, South Korea, Taiwan and Vietnam all faced outings, while Thailand was the only exception, attracting 17 million Dollars at FII entries.
Analysts attribute this capital flight to the change of global economic policies, in particular the increase in bond yields in the United States, which made American assets more attractive to investors. Vipul Bhowar, main investments of director of the director at Waterfield Advisors, explained that higher American bond yields prompted FIIs to keep Indian actions and other emerging markets away, promoting perceived security of American shares.
Adding to investors’ concerns is a slowdown in business sales growth. The gross sales of NIFTY50 companies increased 6.6% in annual shift during the quarter of December 2024, against 9.2% during the corresponding quarter of the previous year. This slow growth has attenuated enthusiasm for Indian actions, further supplying the exodus of foreign capital.
Despite solid macroeconomic fundamental, the Indian market remains vulnerable to external opposite winds. Shrikant Chouhan, head of research on actions at Kotak Securities, has noted that the markets are currently focusing on downward risks, including prices imposed by the United States on Indian exports, inner growth uncertainty and internal growth and The profits of Terna companies in the third quarter FY25. Given these factors, Chouhan plans that foreign portfolio investment flows (FPI) should remain volatile in the short term.
IMF on India’s growth: the slowdown is temporary
India’s GDP growth has slowed down to a minimum of almost two years of 5.4% during the quarter of July-September, mainly due to low performance in the manufacturing and mining sectors and moderate consumption. However, the Deputy Director General of the IMF, Gita Gopinath, said last month that India’s economic slowdown was temporary and that the country had to achieve 6.5% GDP growth.
“We see it as a temporary thing. There has been delays in the implementation of some of the public infrastructure projects, but we see that we are resuming. We continue to see the force of rural consumption,” said Gopinath in an exclusive interview with business today. Gopinath said that a recovery was on the horizon, declaring: “For the exercise as a whole, our growth number is 6.5%. We are therefore expecting to see a recovery.”
