FPIs Withdraw ₹85,790 Crore from Indian Equities in October: Key Insights for Investors - Read Now
Foreign portfolio investors withdrew ₹85,790 crore from Indian equities in October. This is the worst month on record for foreign fund outflows. After making an extraordinary investment of ₹57,724 crore in September 2024, this is the biggest withdrawal.
It is mainly due to attractive valuations of Chinese markets, which have been triggered due to the new stimulus measures that made Chinese equities an attractive deal. High prices of Indian equity have also made FPIs reevaluate their investments and that has resulted in this massive correction.
Data shows that the FPI withdrawal between October 1 and 25 has significantly influenced the market sentiment, as the Nifty index has dipped by as much as 8% from its peak. According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, "The continued selling seems largely led by cheaper Chinese valuations and high Indian stock prices.".
Foreign investment in Indian equities will largely be guided by global events with a shift in economic conditions and geopolitical tensions. Himanshu Srivastava, Director of Research at Morningstar Investment Research India, said, "One needs to keep a close eye on domestic indicators like corporate earnings and festive demand as FPIs measure opportunities in the market.".
The same period also saw FPIs withdraw ₹5,008 crore from debt general limits alongside a small investment of ₹410 crore in the debt VRR. Where 2024 has seen FPIs as net buyers, this trend begins to reverse because of global uncertainties.
With US elections on the horizon and rising bond yields signaling cautious economic projections, it appears unlikely that FPI inflows will settle down anytime soon as the trends are still volatile in nature for emerging markets. Investors must, therefore, keep a close eye on these developments as they continue to play out over the weeks ahead.
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