FPIs Withdraw ₹24,548 Crore from Indian Equities in October Amidst Global Uncertainty

FPIs Withdraw ₹24,548 Crore from Indian Equities in October Amidst Global Uncertainty

VoM News Desk | November 2, 2023 | 02:29 PM IST | Breaking News | Follow on Google News

FPIs Withdraw ₹24,548 Crore from Indian Equities in October Amidst Global Uncertainty

FPIs Withdraw ₹24,548 Crore from Indian Equities in October Amidst Global Uncertainty

Foreign Portfolio Investors (FPIs) continued their selling streak in October, pulling out a significant ₹24,548 crore from Indian equities. This decision came in light of the rising US Treasury yields and an increase in crude oil prices, contributing to global market uncertainty.

Shift from Sustained Buying to Selling

This shift to selling follows a period of sustained buying by FPIs, which began in March and persisted until August. During this period, FPIs invested ₹1,68,179 crore into Indian equities, according to depositories’ data.

Market Impact of FPI Outflows

The consequences of continuous FPI outflows, coupled with factors like the Israel-Palestine conflict, surging US bond yields, and a strengthening US dollar, were reflected in the Indian stock market’s performance. The market experienced a 2.8% decline in October, marking the most substantial monthly drop in CY23. It is currently down 6.04% from its all-time high of 20,222 points.

Performance in 2023

The Nifty index witnessed fluctuations throughout 2023. It started the year in the red with over a 2% loss in January and February. However, it then rebounded with gains in the following months, including a 0.3% rise in March, a 4% rally in April, a 2.6% jump in May, a 3.5% rise in June, a 2.9% increase in July, and a 2% gain in September.

Factors Contributing to FPI Outflows

The recent FPI selling has primarily impacted sectors like financials, power, FMCG, and IT. The rise in bond yields has prompted FPIs to withdraw funds. The Israel-Palestine conflict and the uncertainty surrounding it have also added to the negative sentiment in the market. The financial services and IT segments have been hit the hardest due to FPI selling, as these sectors represent a significant portion of FPIs’ Assets Under Management (AUM).

Expert Opinions on FPI Outflows

Siddarth Bhamre, EVP and Head of Research at Religare Broking, suggests that India is in a favorable position, but the world’s dynamics play a significant role in asset allocation. The current trend may continue until global risk-on trade resumes.

Viraj Gandhi, CEO of SAMCO Mutual Fund, highlights the impact of US Federal Reserve rate hikes and the interest rate difference between India and the USA as key reasons for FPI selling. Clarity on interest rate policies may influence further investments.

Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, notes that geopolitical conflicts have increased the risk premium attached to equities. US 10-year bonds are experiencing selling pressure, leading to higher yields, making bonds more attractive compared to equities.

Conclusion

The outflows of FPI funds from Indian equities are a response to various global and domestic factors, with uncertainty and rising bond yields playing a significant role in this trend. The future trajectory will likely be influenced by developments in global markets and interest rate policies.

Disclaimer: The opinions and suggestions provided in this article are those of individual analysts and do not reflect the viewpoints of VoM News. We encourage investors to consult with certified experts before making any investment choices.

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