domestic Foreign investors have pulled out Rs 22,420 crore from the Indian equity market so far this month due to high stock market valuations, rising allocation in China and rise in treasury yields along with the US dollar. With this selloff, foreign portfolio investors (FPIs) have pulled out a total of Rs 15,827 crore so far in 2024. Financial advisor Akhil Puri, partner, Forvis Majors in India, said FPI inflows are expected to remain low in the short term as liquidity remains tight.
Little hope of improvement in short term
There is no possibility of a positive change in FPI activity before the beginning of January, due to which the overall market sentiment remains weak. According to the data, FPIs have recorded a net withdrawal of Rs 22,420 crore so far this month. This comes after a net withdrawal of Rs 94,017 crore in October, which was the worst monthly withdrawal. Earlier, in March 2020, FPIs had withdrawn Rs 61,973 crore from equities. Foreign investors invested Rs 57,724 crore, a nine-month high, in September 2024.
Why is the sale happening?
VK Vijayakumar, chief investment strategist at Geojit Financial Services, said the continuous selling by FPIs since October was due to the combined effect of three factors. These factors include high valuations in India, concerns over declining earnings and sentiments being impacted by Donald Trump's victory in the US presidential election. On the other hand, FPIs invested Rs 42 crore in debt general limit and Rs 362 crore in debt voluntary retention route (VRR) during the period under review. So far this year, FPIs have invested Rs 1.06 lakh crore in the debt market.
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