Foreign investors have not made any change in their stance yet. FPI is continuously withdrawing money from Indian shares. In fact, foreign investors are very excited by the special package given by the Chinese government to boost the economy. On the other hand, the valuation of Indian stock market has increased, due to which foreign investors are not ready to invest money at high valuation, due to which they are booking profits.
On the other hand, after Trump's victory, there is a rise in the dollar index. The effect of which is visible in American yields. Foreign investors are withdrawing money from India and going towards American securities. This is the reason why in the last 50 days, foreign investors have withdrawn more than Rs 1 lakh crore from the stock market. Let us also tell you how much money investors have withdrawn from the stock market in the months of October and November.
Foreign investors have pulled out Rs 22,420 crore from the Indian equity market so far this month due to high valuations of the domestic stock market, 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. According to the data, so far this month FPIs have registered a net withdrawal of Rs 22,420 crore. 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 Earlier, in March 2020, FPIs had withdrawn Rs 61,973 crore from equities.
In September 2024, foreign investors invested Rs 57,724 crore, the highest level in 9 months. By the way, if the withdrawals of October and November are included so far, then FPIs have withdrawn about Rs 1,16,437 crore from the stock market in about 50 days. 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.
Financial advisor Akhil Puri, partner, Fourvis Majors in India, said FPI inflows are expected to remain low in the short term along with reduced liquidity. There is no possibility of positive change in FPI activity before the beginning of January, due to which the overall market sentiment remains weak.
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 are also influenced by high valuations in India, concerns about declining earnings and Donald Trump's victory in the US presidential election.
