Foreign investors have withdrawn about Rs 86 thousand crores from the Indian stock market in the month of October. This is the first time in the history of the Indian stock market that foreign investors have withdrawn so much money from the stock market in a single month. The main reason for this is said to be increasing investment in China.
On the other hand, the main reason for foreign investors making profits from the Indian stock market can also be investment in other assets. Which includes gold and real estate. It is possible that due to geopolitical tension and the news of uncertain US Presidential elections, foreign investors may have changed their stance. Let us also tell you what kind of figures of investment by foreign investors are coming out.
The process of selling by foreign portfolio investors (FPIs) in the Indian stock market continues. So far this month, FPIs have withdrawn Rs 85,790 crore or $10.2 billion from the Indian market. Due to China's stimulus measures, attractive valuation of shares there and high valuation of domestic shares, FPIs are continuously selling in the Indian market. The month of October is proving to be the worst in terms of withdrawal of foreign funds. In March 2020, FPIs had withdrawn Rs 61,973 crore from stocks.
Earlier in September, FPIs had invested Rs 57,724 crore in the Indian stock market, which is the highest level of their investment in nine months. According to depository data, foreign portfolio investors had been continuous buyers since June. They had definitely withdrawn Rs 34,252 crore in April-May. According to the data, FPIs have withdrawn a net Rs 85,790 crore from the Indian stock market between October 1 and 25. Continuous selling by FPIs has affected the market sentiment, due to which NSE Nifty has fallen by eight percent from its peak level.
According to the data, FPIs have withdrawn Rs 5,008 crore from bonds through the general limit and invested Rs 410 crore through the voluntary retention route (VRR) during the period under review. So far this year, FPIs have invested Rs 14,820 crore in shares and Rs 1.05 lakh crore in the debt or bond market.
Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, said that future FPI investment in the Indian market will depend on global developments like geopolitical situation and interest rate fluctuations. He said that on the domestic front, FPI will keep an eye on the inflation trend, quarterly results of companies and demand for the festive season. VK Vijayakumar, chief investment strategist at Geojit Financial Services, said that the continued selling trend of FPIs is unlikely to change immediately. Due to China's incentive measures, FPIs are turning to the market there. Apart from this, due to high valuations in India, FPIs remain sellers.
