Nifty Trails Global Peers Amid FII Outflows And Trade Tensions
Despite these challenges, the Nifty has held above key technical support levels.
India's benchmark Nifty 50 index blazed to record highs in the first few months of 2024, but since then slowing corporate earnings, sustained foreign institutional investor outflows and global headwinds have since dragged it down. Despite posting modest gains of 3.56% so far this year, the index continues to underperform global peers.
In comparison, most major global indices have delivered significantly stronger returns this year. The Kospi has surged 30.48%, while the Hang Seng has climbed 28.25%. Germany’s DAX has gained 21.24%, the FTSE 100 is up 12.45%, China’s CSI 300 has advanced 11.81%, Japan’s Nikkei is also higher by 7.50%, and the S&P 500 has risen 8.45%.
"Nifty’s underperformance this year has largely been driven by global headwinds, which have triggered foreign institutional investors (FIIs) to pull out over $13 billion since the start of 2025," said Prashant Tapse, Senior Vice President-Research at Mehta Equities.
The sharp rise in US bond yields and a stronger dollar have also dampened appetite for emerging market assets, including India. At the same time, rising global risk aversion and escalating trade tensions, particularly the threat of fresh tariff hikes from US President Donald Trump on Indian exports, have further clouded investor sentiment.
According to Tapse, corporate earnings has remained sluggish for five straight quarters, adding to the pressure.
Nifty 50 In 2024
Looking back to 2024, the benchmark rose 21% in September, but fell 10% in November amid monthly foreign selling. Nifty 50 ended last year with 8.8% gains, logging its ninth straight year of gains. However, it still underperformed in comparison to global markets.
In the last year, S&P 500 gained 23.3%, Nikkei 225 surged 19.2%, CSI 300 rose 14.7%, DAX delivered 11.3%, and FTSE 100 posted 5.7% gains.
Looking Ahead
Despite these challenges, the Nifty has held above key technical support levels. The index continues to trade above its 21-day moving average of 24,765 and its 100-day moving average of 24,591, said Tapse.
"Unless there is a clear easing of global trade frictions and stabilization in FII flows, market sentiment is unlikely to see a sustained northward move," he added.
