We are affected by the extreme volatility in this year’s top-performing markets. Even when those markets look vulnerable, we are actively considering investing there. The fear of missing out (FOMO) on investing abroad is at its highest. Despite domestic markets progressively becoming more attractive with every conviction, the conviction to invest here is low.
Now, our investors clearly prefer investing abroad. This is despite our market being one of the worst performers this year. But look at the irony. We did not participate before those markets boomed, so we are late to the party. Arriving late to a party with acute FOMO is a bigger risk than missing the entire event. And, when those markets wobble, we are sure to be shaken up. Whatever happens now in global markets will affect us, just as our market did. It is important to carefully assess the relative merits of investing in India now versus investing globally.
For starters, let us look at valuations. This year’s selling by FIIs negatively impacted valuations all the way. Our market got sold through the stock market boom in the USA, Korea, and Taiwan. Our markets showed significant divergence from both global and emerging markets through 2026. Now, as those markets are selling off, we are being sold to. And, this can be quite tiring. Not participating in the upside while bearing the brunt of the downside is something we haven’t experienced in a long time.
The question on everyone’s mind is: When will FII selling abate? We are anxious to see them turn from active sellers into buyers. But our real focus should be on the pockets of undervaluation our market constantly presents. These pockets appear when FIIs dump stocks in short bursts of time.
We should be capitalising on specific opportunities with sensible bottom fishing. Instead, we are worrying about when the FIIs will return. The jury is divided, and opinions are strongly polarised on whether they will even return this year. Clearly, we currently have little to no visibility into their next steps. We only clearly see active selling.
The inability to predict global investor actions is not really a concern. The bigger concern is the unwillingness to show conviction in our markets when everyone else is tiring and thinking of exiting. Opportunity in equity investing is a revolving door. Achieving gains when many people are exiting through the same door yields outlier long-term returns. That others are exiting should not stop us from showing conviction in the right places. The two must-do things now are: standing our ground and showing conviction in the Indian market.
