Foreign investors have withdrawn a substantial amount of Rs 22,194 crore from Indian equities this month, as concerns over a weak earnings season, a steady rise in the US dollar, and potential trade tensions during Donald Trump’s presidency weigh on market sentiment.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said,”The single major reason for the relentless selling by the FPIs is the steady rise in the dollar index which is above 109 now. The surge in the 10-year bond yield to above 4.6 per cent is ensuring capital flows from emerging markets like India.”
This came following an investment of Rs 15,446 crore in the month of December, according to data from depositories. The foreign investors have significantly scaled back their investments in the Indian market amid growing global and domestic headwinds.
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Foreign investors have been pulling back from Indian markets, driven by a combination of factors, including expectations of another weak earnings season, concerns over the potential tariff war under Donald Trump’s presidency, slowing GDP growth, persistent inflation, and uncertainty surrounding interest rate cuts in India.
Himanshu Srivastava, Associate Director at Morningstar Investment Research India, also pointed to the record-low level of the Indian rupee, rising US bond yields, and high valuations of Indian equities, making the market less appealing to foreign investors.
According to the data, Foreign Portfolio Investors (FPIs) have sold shares worth Rs 22,194 crore from Indian equities so far this month, up to January 10. FPIs have been net sellers on every trading day except January 2.
(With PTI Inputs)
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