FPIs pulled Rs 44,396 crore from equities in January amid weak earnings outlook, rising dollar.
Foreign investors pulled Rs 44,396 crore out of Indian funds this month, driven by a stronger dollar, rising bond yields in the US, and expectations of a weaker earnings season.
This follows an investment of Rs 15,446 crore in the month of December, data with depositories showed.
Mood swings come amid global and domestic storms.
“The continued decline in the value of the Indian rupee is putting a lot of pressure on foreign investors resulting in them pulling out of Indian equity markets,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Advisers India.
Adding to that, the high valuation of Indian equities, despite recent corrections, expectations of a weak revenue season and uncertainty over the pace of economic growth made investors cautious, he added.
According to the data, Foreign Portfolio Investors (FPIs) have sold shares worth Rs 44,396 crore in Indian stocks so far this month (till January 17).
FPIs were sellers on all days this month except January 2.
“The main reasons for strong FPIs’ selling are dollar strength and rising US bond yields. With the dollar index above 109 and the 10-year US bond yield above 4.6 percent, it makes sense for FPIs to sell. in emerging markets , especially in the high-value emerging market of India,” VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.
With US bond yields attractive, FPIs have been sellers in the debt market, too. They have withdrawn Rs 4,848 crore from the general credit limit and Rs 6,176 crore from the voluntary debt retention route.
Vipul Bhowar, Senior Director – Listed Investments, Waterfield Advisors, said a cyclical improvement in corporate earnings, along with strong GDP growth driven by robust domestic consumption and increased government spending on infrastructure projects, could lead to a possible shift in FPI flows to India. .
The overall trend reflects the cautious approach of foreign investors, who have postponed investments in Indian stocks significantly in 2024, with an income of only Rs 427 million.
This is in stark contrast to the extraordinary inflow of Rs 1.71 lakh crore in 2023, driven by optimism about India’s strong economic fundamentals. In comparison, 2022 saw a net outflow of Rs 1.21 lakh crore amid aggressive rate hikes by global central banks.
