FPIs withdrew Rs 85,790 crore from Indian equities in October at attractive rates for Chinese markets.
Foreign investors continued to sell off the Indian stock market, pulling out Rs 85,790 crore (about $10.2 billion) in cash this month due to China’s stimulus measures, attractive equity valuations, and higher domestic equity prices.
October turns out to be the worst month for foreign currency outflows. In March 2020, FPIs withdrew Rs 61,973 crore from equities. The latest exit came after a nine-month high investment of Rs 57,724 crore in September 2024.
Since June, foreign portfolio investors (FPIs) have been buying stocks after withdrawing Rs 34,252 crore in April-May. Overall, FPIs were the biggest buyers in 2024, except for January, April, and May, data with depositories showed.
Looking ahead, the trajectory of global events such as the country’s development and interest rate movements will play an important role in shaping future foreign investment in Indian stocks, said Himanshu Srivastava, Associate Director, Head of Research, Morningstar Investment Research India, said.
Domestically, key indicators such as inflation trends, corporate earnings, and the impact of holiday season demand will also be closely watched by FPIs as they assess opportunities in the Indian market, he added.
According to the data, FPIs made a total withdrawal of Rs 85,790 crore from stocks between October 1 and 25. Continued FPI sales weighed on the market, pushing the benchmark NSE index down 8 percent from the peak.
The ongoing FPI selling trend shows no signs of abating anytime soon. The sell-off was driven by China’s stimulus measures and cheap Chinese stock ratings. Also, high valuation makes India a top choice for FPIs to sell, said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
This month has seen significant outflows from FPI as political tensions and changing global economic conditions impact investor sentiment, said Akhil Puri, Partner, Financial Advisor, Forvis Mazars in India.
Growing concerns about the country’s stability and recent developments in China have led foreign investors to take a more cautious stance, reallocating capital to safer markets. The trend highlights the impact of global uncertainty on emerging markets, where volatility can significantly alter investment patterns, he added.
“With the US election approaching, the recent sharp rise in US bond yields implying less expectations of aggressive rate cuts by the US Fed, lower growth and inflation expectations at home, continued political tensions between Israel-Iran and Russia-Ukraine have led to -FPIs. We issue funds in many EMs, including India,” said Piyush Mehta, Small Caps Manager and CIO at Caprize Investment.
In addition, FPIs disbursed Rs 5,008 crore in the general credit limit and invested Rs 410 crore in the Voluntary Retention Route (VRR) of debt during the period under review.
So far this year, FPIs have invested Rs 14,820 crore in equities and Rs 1.05 lakh crore in the debt market.
