The current trend comes after a brief lull in October when Foreign Portfolio Investors (FPIs) infused Rs 14,610 crore, breaking a three-month streak of heavy withdrawals. FPIs sold shares worth Rs 23,885 crore in September, Rs 34,990 crore in August and Rs 17,700 crore in July.According to data from the National Securities Depository Ltd (NSDL), FPIs pulled out a net Rs 17,955 crore from Indian equities between December 1 and 12.
Market experts attributed these continued outflows to several factors, including the sharp depreciation of the rupee and rich Indian valuations.
Explaining the outflows, Himanshu Srivastava, Principal Manager Research at Morningstar Investment Research India, said higher US interest rates, tighter liquidity conditions and a preference for safer or higher-yielding assets from developed markets have weighed on investor sentiment.
India’s relatively rich equity valuations have further added pressure compared to other emerging markets that currently offer better value, he added. Adding to these concerns, Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, pointed to the weakness of the Indian rupee, global portfolio rebalancing, year-end effects and continued macroeconomic uncertainty as the main reasons behind the ongoing pullback.
Despite these continued foreign sales, the impact on markets has been largely offset by strong participation from domestic institutional investors (DII). DIIs invested Rs 39,965 crore in the same period, effectively eclipsing FPI outflows.
Looking ahead, some market experts think selling pressure could ease.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that continued selling appears unsustainable given India’s strong growth and earnings prospects, indicating that FPI selling is likely to decline in the future.
Khan added that an accelerated trade deal between the US and India could potentially spark a reversal in foreign investment trends.
Meanwhile, in the debt market, FPIs have drawn down Rs 310 crore under the overall limit but invested Rs 151 crore through the voluntary retention route in the same period.
#FPIs #withdraw #Indian #equities #December #total #outflow #lakh