FPIs withdraw record Rs 94,000 cr from Indian equities in Oct

FPIs outflows: Foreign investors pulled out a massive Rs 94,000 crore (around $11.2 billion) from Indian stock market in October, making it worst-ever month in terms of outflows, triggered by elevated valuation of domestic equities and attractive valuations of Chinese stocks.

Before this, foreign portfolio investors (FPIs) withdrew Rs 61,973 crore from equities in March 2020.

latest outflow came after a nine-month high investment of Rs 57,724 crore in September 2024.

Since June, FPIs have consistently bought equities after withdrawing Rs 34,252 crore in April-May. Overall, FPIs have been net buyers in 2024, except for January, April and May, data with depositories showed.

Looking ahead, trajectory of global events like geopolitical developments, interest rate movements, progress in Chinese ecomy and outcome of US Presidential election will play a crucial role in shaping future foreign investment in Indian equities, Himanshu Srivastava, Associate Director, Manr Research, Morningstar Investment Research India, said.

On domestic front, key indicators like inflation trajectory, corporate earnings, and impact of festive season demand will also be closely watched by FPIs as y assess opportunities in Indian market, he added.

According to data, FPIs recorded a net outflow of Rs 94,017 crore in October. intensity of net outflows could be gauged from fact that except for one day, FPIs were net sellers throughout month, bringing ir total investment for 2024 down to Rs 6,593 crore.

This relentless selling resulted in about an 8 per cent decline in benchmark indices from ir peaks.

Several factors contributed towards this massive withdrawal of foreign capital from Indian equity markets in October.

major among m is elevated valuations of Indian equities. This has triggered a shift in investments towards China, where valuations are currently more attractive. Additionally, a series of stimulus measures, aimed at bolstering Chinese ecomic growth has made Chinese equities increasingly appealing to global investors, Srivastava said.

Despite massive FPI selling in financials, this sector is resilient since valuations are fair and every selling is being absorbed by DIIs and individual investors, particularly HNIs, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

In addition, FPIs pulled out Rs 4,406 crore from debt general limit and invested Rs 100 crore from debt Voluntary Retention Route (VRR) during period under review.

So far this year, FPIs invested Rs 1.06 lakh crore in debt market.