Foreign portfolio investors (FPIs) continued to offload Indian equities in October due to stimulus measures introduced in the Chinese economy, lucrative stock valuations, and the high price of domestic equities. Official data from the depositories revealed that the investors withdrew Rs 85,790 crore from the market in the month, as of October 25, 2024, while they pulled out Rs 5,008 crore from the debt general limit. 

During the reviewing period, the FPIs invested Rs 410 crore from the debt Voluntary Retention Route (VRR), data revealed. October emerged as the worst-ever month with regards to foreign fund outflows, reported PTI.

The recent outflow follows the investors pouring in funds worth Rs 57,724 crore in September, marking a nine-month high. Overall, FPIs remained net buyers in 2024, except for January, April, and May.

Sharing an outlook, Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, said, “Looking ahead, the trajectory of global events like geopolitical developments and interest rate movements will play a crucial role in shaping future foreign investment in Indian equities. On the domestic front, key indicators like inflation trends, corporate earnings, and the impact of festive season demand will also be closely watched by FPIs as they assess opportunities in the Indian market.”

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, explained that the consistent selling from FPIs has affected the sentiment in the market. This has also resulted in a plunge in the NSE benchmark Nifty50 which fell 8 per cent from the peak. “The trend of sustained FPI selling is showing no signs of reversal any time soon. The selling was triggered by the Chinese stimulus measures and the cheap valuations of Chinese stocks. Also, the elevated valuations made India the top choice of FPIs to sell,” he noted.