In November Rs. FPIs continue to sell with an outflow of Rs 21,612 crore

Foreign investors in November withdrew from the Indian equity market Rs. 21,612 crore (USD 2.56 billion) were withdrawn, mainly due to rising US bond yields, stronger dollar and expected slowdown in the domestic economy. While the sell-off continues, the volume of net outflows declined significantly compared to October, when FPIs posted Rs. A massive withdrawal of Rs 94,017 crore (USD 11.2 billion) was recorded.

With the latest drag, Foreign Portfolio Investors (FPIs) have so far in 2024 invested a total of Rs. 15,019 crore has experienced a net outflow.

Looking ahead, the flow of foreign investments into Indian equity markets will depend on several key factors. These include the policies implemented under Donald Trump’s presidency, the prevailing inflation and interest rate environment and the evolving geopolitical landscape, said Himanshu Srivastava, associate director, manager research, Morningstar Investment Research India.

Further, the third quarter earnings performance of Indian companies and the country’s progress on the economic growth front will play a crucial role in shaping investor sentiment and influencing foreign inflows, he added.

According to the data, FPIs in November raised Rs. 21,612 crore recorded a net outflow. This October Rs. 94,017 crore followed by a net withdrawal, which was the worst monthly outflow.

However, in September, foreign investors invested Rs. 57,724 crore had invested nine months high.

Market analysts attributed the latest outflows to rising US bond yields, a stronger dollar and expectations of a slowdown in the domestic economy.

Overall, November experienced a net outflow but the FPIs reversed significantly early in the week ended November 29, due to the decisive victory of the BJP-led Mahayuti alliance in the Maharashtra assembly elections. Srivastava said the resulting political stability appears to have bolstered investor confidence.

Another factor contributing to this buying activity is the rebalancing of MSCI’s major indices, which has added some select Indian stocks to its index. In addition, a glimmer of hope for a ceasefire between Israel and Lebanon could also positively influence market sentiment, especially from a geopolitical point of view, he added.

A confusing feature of recent FPI activity is their highly erratic nature. For instance, during November 23-25, FPIs were buyers, however, in the next two days they again traded at Rs. 16,139 crore in equity sales, said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

On the other hand, FPIs increased the debt general limit during the period under review by Rs. 1,217 crore and in Debt Voluntary Retention Route (VRR) Rs. 3,034 crore had been invested. So far this year, FPIs have invested Rs. 1.07 lakh crore has been invested.