Mcap of 8 of top-10 most valued companies erodes `1.65 trillion

The Hang Seng index (FIIs buy Chinese stocks through the Hong Kong stock market) shot up by 18.7% in a month in sharp contrast to the 1.55% decline in the Nifty. Since Chinese stocks continue to be cheap, this ‘Sell India, Buy China’ trade may continue

FPJ News Service New Delhi

Despite adverse economic conditions Indian blue chip companies, in general, operate cost-effectively and strive to contribute to shareholders’ wealth and achieve sustainability in profitability. Nevertheless, the combined market capitalisation of eight of the top-10 most valued companies eroded Rs 1,65,784.9 crore last week, with Tata Consultancy Services taking the biggest hit, in line with bearish trends in equities. The BSE-30 Sensex declined 628.15 points for the week ended February 21, 2025, while the Nifty went lower 133.35 points.

The market valuation of TCS tanked Rs 53,185.89 crore to Rs 13,69,717.48 crore. However, the mcap of Reliance Industries jumped Rs 14,547.3 crore to Rs 16,61,369.42 crore. Reliance Industries remained the most valued firm followed by TCS, HDFC Bank, Bharti Airtel, ICICI Bank, Infosys, SBI, Hindustan Unilever, Bajaj Finance, and ITC.

“This week, we expect Nifty to remain in consolidation mode; tracking the mixed global market cues, US trade policy announcements and geopolitical developments with regards to the Russia-Ukraine war,” said Siddhartha Khemka, a Mumbai-based research and wealth management expert.

According to Dr. V K Vijayakumar, a senior investment strategist, FII selling continues unabated in the Indian stock market. After selling stocks for Rs 81,903 crore through the exchanges in January, FIIs followed it up by selling stocks for Rs 30,588 crore in February through February 21.  This takes the total selling in 2025, so far, to Rs 1,12492 crore.  This massive selling has resulted in the Nifty yielding negative returns of four per cent YTD. 

China has emerged as a major destination of portfolio flows. “The Hang Seng index (FIIs buy Chinese stocks through the Hong Kong stock market) shot up by 18.7 per cent in a month in sharp contrast to the 1.55 per cent decline in the Nifty. Since Chinese stocks continue to be cheap, this ‘Sell India, Buy China’ trade may continue.

But this trade has happened in the past and experience is that it will fizzle out soon since there are structural problems constraining Chinese economic revival. Revival of FII investment in India will happen when economic growth and corporate earnings revive. Indications of that are likely to happen in two to three months,” Dr VKV added.

Another wealth management expert Vaibhav Porwal said, “Since October 2024, India’s market cap has fallen by about US$ 1 trillion, while China’s has risen by US$2 trillion. This suggests a tactical shift in FII flows.  India continues to trade at a premium compared to other emerging markets, prompting global investors to reassess positions. Also, a strong dollar often attracts capital to US markets, considered safer.

“After a prolonged correction, Chinese equities have become attractively valued. China’s economic stimulus package to boost FII sentiment has renewed investor confidence in its recovery story. The recent rally can be attributed to a blend of factors, with its economic stimulus having an overarching impact on the economy. “A consolidation or earnings-driven growth could reset valuations and make Indian equities more attractive. 

“FII flows will be dependent on how the earnings growth recovers. That being said, FII flows could return to India in the next 3–6 months, as the economy and macro factors in the long term are favourable. Strong domestic demand, digital transformation, and infrastructure push are long-term drivers that are likely to bolster corporate earnings and sustain growth,” Porwal added. Equity markets would remain closed on Wednesday on account of ‘Mahashivratri’.