FPIs Pull Rs 22,420 Cr From Equities In November Amid Global Shifts

Foreign Portfolio Investors (FPIs) have pulled Rs 22,420 crore from Indian equities so far in November, extending a selling trend driven by high valuations in domestic stocks, increasing allocations to China, a strengthening US dollar, and rising US Treasury yields.

This month's sell-off adds to the cumulative net outflow of Rs 15,827 crore by FPIs in 2024, highlighting a challenging year for the Indian equity market. Analysts expect subdued FPI inflows in the near term, with a potential rebound only by January 2025.

The persistent outflows from Indian equities can be attributed to several key factors. High valuations in domestic stocks, coupled with fears of an earnings downgrade, have deterred foreign investors, prompting a shift in sentiment. Analysts also point to the "Buy US, Sell India" trade, where FPIs are reallocating funds to the US and other developed markets that have delivered better returns compared to Indian equities in recent months.

Additionally, China's introduction of new stimulus measures and its relatively lower valuations have drawn significant foreign interest, further diverting investments from India. Macroeconomic challenges such as rising inflation, concerns over delayed interest rate cuts, geopolitical tensions, and uncertainty surrounding India's economic growth have compounded investor apprehensions.

Furthermore, the strengthening US dollar and higher Treasury yields have made the US market more attractive, signalling stronger economic prospects and pulling FPIs away from emerging markets like India.

November's outflows follow October's massive Rs 94,017 crore net withdrawal, marking the worst monthly outflow this year. Comparatively, September witnessed a nine-month high FPI inflow of Rs 57,724 crore.

Meanwhile, FPIs have maintained a positive stance in India’s debt market, investing Rs 42 crore in the general debt limit and Rs 362 crore under the voluntary retention route (VRR) in November. Year-to-date, FPIs have invested Rs 1.06 lakh crore in Indian debt.

As global and domestic factors continue to influence market dynamics, the Indian equity market remains under pressure, with experts predicting cautious investor activity in the months ahead.