By Apoorva Ajith and Subashini K J J | 23 August 2024

Market growth will be extended and paced out as Foreign Institutional Investment (FII) inflows are declining, said Nirav R. Karkera, head of research at Fisdom, a fintech platform.

FII inflows have fallen by 43% from Rs. 2,37,061 lakh crore in 2023 to Rs 1,35,210 lakh crore as of 23 August, 2024, according to Central Depositary Services (India). The weakness in the market is from a “growth standpoint” and not a “price standpoint,” said Karkera.

The Indian stock exchanges are also expected to be volatile and experience intermediate declines due to macroeconomic factors such as currency , inflation, and irregular consumption patterns that might lead to a steeper decline.

 “Several sectors are growing while others are not, it is difficult to conclude the nature of consumption patterns”, said Souvik Saha, investment strategist, DSP Asset managers. He said that consumption patterns are no longer binary, which means that they cannot be classified as good or bad.

 Though consumption patterns may not be confusing, demand in rural settings and certain sectors like automobiles is stagnating.

 Expected growth might be paced out, but experts expect a rise in capital inflows if the Federal Reserve cuts interest rates in September. “The proposed off-cycle rate cuts in the US will not affect fixed income but will increase capital inflows into the secondary market,” said Karkera.