The exodus of foreign investments from Indian equity markets continued unabated, with FPIs pulling out nearly Rs 20,000 crore in the last five trading sessions on higher valuations of domestic stocks and shifting their allocation to China.
As a result, foreign portfolio investors (FPIs) have turned net sellers in the equity market, with total outflows reaching Rs 13,401 crore for 2024 so far.
Going ahead, the FPI selling trend is likely to continue in the near term till data indicate the possibility of a trend reversal. If the Q3 results and leading indicators reflect a recovery in earnings, the scenario can change with FPIs reducing selling and even turning buyers. Investors will have to wait and watch for the data, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.
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With the newly elected US president not assuming office until January 2025, the Indian market’s near-term direction will be more influenced by domestic factors like the Maharashtra assembly election results, corporate earnings commentaries, and retail investor behaviour in response to the October and early November downturn, Sunil Damania, Chief Investment Officer, MojoPMS, said.
According to the data, FPIs recorded a net outflow of Rs 19,994 crore so far this month, comprising five trading sessions from November 4-8.
This came following a net withdrawal of Rs 94,017 crore in October, the worst monthly outflow. Before this, FPIs withdrew Rs 61,973 crore from equities in March 2020.
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In September 2024, foreign investors made a nine-month high investment of Rs 57,724 crore.
Since June, FPIs have consistently bought equities after withdrawing Rs 34,252 crore in April-May. Overall, FPIs have been net buyers in 2024, except for January, April, May and October, data with the depositories showed.
While the immediate uncertainty over the US Presidential election and interest rates in the US has been addressed, several drivers of the foreign flows into the Indian equity markets continue to remain unfavourable.
One of the primary reasons for FPIs exiting Indian equities is their newfound affinity towards China, given its attractive valuation and potential for generating higher growth. China has recently introduced a series of stimulus measures to revitalise its slowing economy and attract foreign investments,
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