NEW DELHI: Foreign investors continued to be net sellers as they withdrew approximately Rs 20,000 crore from the Indian equity markets in the past five trading sessions from November 4-8, primarily due to higher stock valuations and reallocation to China. Total FPI outflows in the equity market have reached Rs 13,401 crore this year. Earlier, the FPI’s withdrew record Rs 94,017 crore in October.
VK Vijayakumar, chief investment strategist at Geojit Financial Services said tha, Q3 results and leading indicators showing earnings recovery could alter this scenario, potentially converting FPIs from sellers to buyers.
Sunil Damania, chief investment officer at MojoPMS, said that domestic factors will primarily influence the Indian market’s short-term direction, including Maharashtra assembly election results, corporate earnings reports, and retail investor responses to the October-November decline.
Meanwhile, September 2024 saw the highest foreign investment of Rs 57,724 crore. Since June, FPIs maintained consistent equity purchases after withdrawing Rs 34,252 crore in April-May.
Himanshu Srivastava from Morningstar Investment Research India explains that FPIs are favouring China due to its attractive valuations and growth potential, supported by recent stimulus measures. Abhishek Banerjee of Loutusdew cautions that this shift towards China might be a value trap despite its deep value appeal.
Additionally, the appreciation of US dollar and Treasury yields has attracted FPI investments, anticipating a stronger US economy.
However, despite recent outflows, November witnessed 40-50 new FPI registration applications, according to Manoj Purohit from BDO India, following Sebi’s relaxation allowing increased NRI participation and simplified entry procedures.
In the debt market, FPIs invested Rs 599 crore in the general limit and Rs 2,896 crore in the voluntary retention route during this period. The total FPI investment in debt markets for the year stands at Rs 1.06 lakh crore.