Investing in 2025: Will domestic funds continue to counter FPI sell-offs amid rising valuations?
domestic funds are able to effectively counter selling bouts by foreign portfolio investors (FPIs) as and when they occur.
Will that continue in 2025? Would domestic funds be able to keep buying amid rising valuations and slowing retail investments as is visible from the trend in systematic investment plan (SIP) schemes?
Domestic benchmark equity indices have shown sustained resilience in 2024 — the BSE Sensex gained 8.7% as of December 23, the ninth consecutive year of positive return. This is despite the heavy selling by FPIs in the secondary equity market during the second half of the year, rising geopolitical tensions in West Asia, growing uncertainty over the stance of the Trump administration in the US towards global trade, and India-specific concerns such as high inflation, slowing consumption demand and decelerating GDP growth.
Over the past decade, the Sensex has yielded returns in each year barring 2015, resulting in a compounded annual growth rate (CAGR) of a healthy 14%. While it is heartening to see such a long streak by equity bulls, it also reflects the tough task ahead to retain the high ground in the year ahead given the domestic and global concerns.
And that leads us to the theme of this year’s ET 500 edition: Investing amid turbulent times. Here, we try to decipher the challenges and opportunities that will shape the investment scenario in 2025.
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