Foreigner Portfolio investors (FPIs) have pulled out Rs 26,533 crore from Indian stock markets so far this month. FPIs are investing in the Chinese market due to weak quarterly results of companies and high valuations of domestic stocks. Due to this, they are continuously selling in the Indian market. Although FPI selling continues, their net outflows have declined significantly compared to October. FPIs had withdrawn a net Rs 94,017 crore ($11.2 billion) from the Indian market in October.
Keep an eye on Donald Trump’s policies
According to depository data, after this latest withdrawal, foreign investors have withdrawn a net Rs 19,940 crore from the Indian stock market so far in 2024. Himanshu Srivastava, Associate Director-Manager Research, Morningstar Investment Research India, said that in future, the flow of foreign investors in the Indian stock market will depend on the policies of the newly elected US President Donald Trump. Apart from this, inflation and policy rates will also be important for the attitude of foreign investors.
Rs 26,533 crore withdrawn this month
Srivastava said that the third quarter results of companies and geopolitical developments will also be important for the direction of FPI. According to the data, FPIs have withdrawn a net Rs 26,533 crore from shares so far this month i.e. till November 22. In October, he had made a net withdrawal of Rs 94,017 crore, which was the highest figure of his withdrawal in a single month. In September, FPIs had infused Rs 57,724 crore into the Indian stock market, which was a nine-month high for their investments.
High valuation a matter of concern
Srivastava said there remains concern over high valuations of Indian equities, due to which FPIs are moving towards markets with more attractive valuations. He said China is receiving inflows from foreign investors at the expense of India because of its attractive valuations. Also, China has recently announced several stimulus measures to boost its slowing economy. He said that the quarterly results of Indian companies have also not been as per expectations and inflation also remains at a high level, due to which FPIs are withdrawing.
How is investing in the bond market?
VK Vijayakumar, chief investment strategist at Geojit Financial Services, said foreign investors are worried about the earnings of companies in the current financial year. He said that the ‘sell in India and buy in China’ approach has now ended. Donald Trump’s ‘influence’ is also in its last stages as the valuation has reached a high level in America too. According to the data, FPIs have withdrawn Rs 1,110 crore from bonds under the normal limit so far this month. At the same time, he has invested Rs 872 crore through Voluntary Retention Route (VRR). Overall, so far this year, FPIs have invested Rs 1.05 lakh crore in the bond market.
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