While selling continues, net inflows have declined significantly compared to October, when foreign portfolio investors (FPIs) inflows on a net basis of Rs. 94,017 crore (USD 11.2 billion) was withdrawn.
Foreign investors have pulled Rs 100 crore from the Indian equity market so far this month due to increased allocations to China, concerns over muted corporate earnings and higher valuations of domestic stocks. 26,533 crore has been withdrawn.
While selling continues, net inflows have declined significantly compared to October, when foreign portfolio investors (FPIs) inflows on a net basis of Rs. 94,017 crore (USD 11.2 billion) was withdrawn.
With the recent pull-out, FPI outflows on a net basis so far in 2024 will be Rs. 19,940 crores.
Going forward, the flow of foreign investors into Indian equity markets will depend on the policies implemented under Donald Trump’s presidency, the prevailing inflation and interest rate dynamics, the dynamics of the geopolitical landscape and the third quarter earnings performance of Indian companies. Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India said.
According to the data, FPIs so far this month (till November 22) have collected Rs. 26,533 crore recorded a net outflow. This October Rs. 94,017 crore followed by a net withdrawal, which was the worst ever monthly outflow. However, in September, foreign investors invested Rs. 57,724 crore had invested nine months high.
Concerns over high valuations of Indian equities persist, prompting FPIs to redirect their focus to markets offering more attractive valuations, Srivastav said.
Additionally, China continues to draw significant foreign inflows at India’s expense, boosted by its attractive valuation levels and the recent announcement of stimulus measures aimed at reviving its slowing economy, he said.
In addition, India’s sub-par corporate earnings and high inflation figures have raised concerns about a possible delay in the reduction in domestic interest rates, he added.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, flagged investor concerns around FY25 earnings. He added that while the ‘Sell India, Buy China’ trade is over, the ‘Trump trade’ also seems to be in its last stages as valuations in the US have reached highs.
In terms of sectors, FPIs bought IT stocks while banking stocks remained resilient despite facing selling pressure, mainly due to support from domestic institutional investors.
On the other hand, FPIs have raised debt from the normal limit of Rs. 1,110 crore withdrawn and till November 22 this month in Debt Voluntary Retention Route (VRR) Rs. 872 crore invested.
So far this year, FPIs have invested Rs. 1.05 lakh crore has been invested.