FPIs Withdraw ₹94,000 Crore from Indian Equities in October: A Historic Outflow - Read Now 

A jarring move has come from Foreign Portfolio Investors, which withdrew a record ₹94,000 crore from the Indian stock market in October 2024. It was the worst month for foreign outflows ever recorded and has been attributed largely to high valuations in Indian equities and the siren song of better valuations in the Chinese stock market.

This huge withdrawal comes after a strong investment month in September 2024, when FPIs invested ₹57,724 crore in equities. Since June, FPIs had followed a pattern of steady buying after having withdrawn ₹34,252 crore in April and May. Even after this October withdrawal, FPIs have been net buyers in 2024, though January, April, and May saw net sales, depository data shows.

He holds that the prospects for foreign investment in Indian equities are likely to be determined by global factors, with geopolitical events, interest-rate movements, and the emergence of the Chinese economy becoming a new normal being added to the list. That is, the outcome of the forthcoming US Presidential elections will also play a big role.

Domestically, any shift in the trend on inflation, corporate earnings and festive season demand can be keenly watched by FPIs who are re-evaluating opportunities within the Indian markets.

Data shows that FPIs had a net outflow of ₹94,017 crore in October as foreign investors remained major net sellers during the month barring one day. The selling did not stop at one time and resulted in a roughly 8% fall in the benchmark indices from their all-time highs.

Historically, this capital withdrawal is attributed to the high valuations of equities in India, making investors look toward China for more attractive valuation metrics. Recent stimuli by the Chinese government to support economic growth enhanced the appeal of Chinese equities for global investors.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, believes the Indian financial sector is quite resilient despite the crushing selling pressure. He believes valuations in the financial sector are reasonable with DIIs and HNIs absorbing the sell-off.

FPIs have availed ₹4,406 crore from the debt general limit and put a tiny ₹100 crore from the debt Voluntary Retention Route (VRR) during this period. In contrast, they have invested a whopping ₹1.06 lakh crore in the debt market during the course of the year.

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