The exodus of foreign investments from Indian equity markets continued unabated, with FPIs pulling out nearly Rs 20,000 crore in the last five trading sessions on higher valuations of domestic stocks and shifting their allocation to China, according to a detailed report by the Press Trust of India. 

As a result, foreign portfolio investors (FPIs) have turned net sellers in the equity market, with total outflows reaching Rs 13,401 crore for 2024 so far, the PTI report explained further.

FPI trend is likely to continue in the near term<o:p></o:p>

Going ahead, the FPI selling trend is likely to continue in the near term till data indicate the possibility of a trend reversal. If the Q3 results and leading indicators reflect a recovery in earnings, the scenario can change with FPIs reducing selling and even turning buyers. Investors will have to wait and watch for the data, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

With the newly elected US president not assuming office until January 2025, the Indian market's near-term direction will be more influenced by domestic factors like the Maharashtra assembly election results, corporate earnings commentaries, and retail investor behaviour in response to the October and early November downturn, Sunil Damania, Chief Investment Officer, MojoPMS, said.

According to the data, FPIs recorded a net outflow of Rs 19,994 crore so far this month, comprising five trading sessions from November 4-8.

October withdrawal of Rs 94,017 was the worst-ever<o:p></o:p>

This came following a net withdrawal of Rs 94,017 crore in October, the worst monthly outflow. Before this, FPIs withdrew Rs 61,973 crore from equities in March 2020. In September 2024, foreign investors made a nine-month high investment of Rs 57,724 crore.

Since June, FPIs have consistently bought equities after withdrawing Rs 34,252 crore in April-May. Overall, FPIs have been net buyers in 2024, except for January, April, May and October, data with the depositories showed, the PTI report detailed further.

Major market event the US election is behind now<o:p></o:p>

While the immediate uncertainty over the US Presidential election and interest rates in the US has been addressed, several drivers of the foreign flows into the Indian equity markets continue to remain unfavourable.

One of the primary reasons for FPIs exiting Indian equities is their newfound affinity towards China, given its attractive valuation and potential for generating higher growth. China has recently introduced a series of stimulus measures to revitalise its slowing economy and attract foreign investments, Himanshu Srivastava, Associate Director Manager Research, Morningstar Investment Research India, said. 

Abhishek Banerjee, small case Manager and founder at Loutusdew, believes that people are shifting money to China in the hope of a deep value trade – but the risk is that it could be a value trap.

Additionally, in recent times, the US dollar and Treasury yields have appreciated significantly, leading FPIs to invest in them in anticipation of a stronger US economy going ahead, Srivastava said.

On the domestic front, despite some correction in recent times, Indian equity markets continue to have high valuations compared to other peer markets. Also, weaker-than-expected quarterly corporate earnings have raised concerns about the growth prospects of Indian companies, he added.

Despite the ongoing outrage of funds since last month, November saw unprecedented applications of about 40-50 new FPI registrations, which are eyeing to enter the Indian market, Manoj Purohit, Partner &amp; Leader, Financial Services Tax, Tax &amp; Regulatory Services, BDO India, said.

This was due to markets regulator Sebi's recent relaxation to NRIs, permitting them to participate up to 100 per cent and announcing measures for ease of entry and operations in India.

On the other hand, FPIs invested Rs 599 crore in the debt general limit and Rs 2,896 crore in the debt voluntary retention route (VRR) during the period under review. So far this year, FPIs invested Rs 1.06 lakh crore in the debt market. Global investors and market participants will closely follow these developments. This will help them make informed investment decisions.

The exodus of foreign investments from Indian equity markets continued unabated, with FPIs pulling out nearly Rs 20,000 crore in the last five trading sessions on higher valuations of domestic stocks and shifting their allocation to China, according to a detailed report by the Press Trust of India.

The exodus of foreign investments from Indian equity markets continued unabated, with FPIs pulling out nearly Rs 20,000 crore in the last five trading sessions on higher valuations of domestic stocks and shifting their allocation to China, according to a detailed report by the Press Trust of India. As a result, foreign portfolio investors (FPIs) have turned net sellers in the equity market, with total outflows reaching Rs 13,401 crore for 2024 so far, the PTI report explained further. FPI trend is likely to continue in the near term Going ahead, the FPI selling trend is likely to continue in the near term till data indicate the possibility of a trend reversal. If the Q3 results and leading indicators reflect a recovery in earnings, the scenario can change with FPIs reducing selling and even turning buyers. Investors will have to wait and watch for the data, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said. With the newly elected US president not assuming office until January 2025, the Indian market's near-term direction will be more influenced by domestic factors like the Maharashtra assembly election results, corporate earnings commentaries, and retail investor behaviour in response to the October and early November downturn, Sunil Damania, Chief Investment Officer, MojoPMS, said. According to the data, FPIs recorded a net outflow of Rs 19,994 crore so far this month, comprising five trading sessions from November 4-8. October withdrawal of Rs 94,017 was the worst-ever This came following a net withdrawal of Rs 94,017 crore in October, the worst monthly outflow. Before this, FPIs withdrew Rs 61,973 crore from equities in March 2020. In September 2024, foreign investors made a nine-month high investment of Rs 57,724 crore. Since June, FPIs have consistently bought equities after withdrawing Rs 34,252 crore in April-May. Overall, FPIs have been net buyers in 2024, except for January, April, May and October, data with the depositories showed, the PTI report detailed further. Major market event the US election is behind now While the immediate uncertainty over the US Presidential election and interest rates in the US has been addressed, several drivers of the foreign flows into the Indian equity markets continue to remain unfavourable. One of the primary reasons for FPIs exiting Indian equities is their newfound affinity towards China, given its attractive valuation and potential for generating higher growth. China has recently introduced a series of stimulus measures to revitalise its slowing economy and attract foreign investments, Himanshu Srivastava, Associate Director Manager Research, Morningstar Investment Research India, said. Abhishek Banerjee, small case Manager and founder at Loutusdew, believes that people are shifting money to China in the hope of a deep value trade – but the risk is that it could be a value trap. Additionally, in recent times, the US dollar and Treasury yields have appreciated significantly, leading FPIs to invest in them in anticipation of a stronger US economy going ahead, Srivastava said. On the domestic front, despite some correction in recent times, Indian equity markets continue to have high valuations compared to other peer markets. Also, weaker-than-expected quarterly corporate earnings have raised concerns about the growth prospects of Indian companies, he added. Despite the ongoing outrage of funds since last month, November saw unprecedented applications of about 40-50 new FPI registrations, which are eyeing to enter the Indian market, Manoj Purohit, Partner & Leader, Financial Services Tax, Tax & Regulatory Services, BDO India, said. This was due to markets regulator Sebi's recent relaxation to NRIs, permitting them to participate up to 100 per cent and announcing measures for ease of entry and operations in India. On the other hand, FPIs invested Rs 599 crore in the debt general limit and Rs 2,896 crore in the debt voluntary retention route (VRR) during the period under review. So far this year, FPIs invested Rs 1.06 lakh crore in the debt market. Global investors and market participants will closely follow these developments. This will help them make informed investment decisions.

Foreign investors pull out nearly Rs 20,000 Cr from equities in the last 5 trading sessions

Foreign investors pulled out a massive Rs 94,000 crore (around $11.2 billion) from the Indian stock market in October, making it the worst-ever month in terms of outflows triggered by the elevated valuation of domestic equities and attractive valuations of Chinese stocks according to a report detailed by the Press Trust of India.

Before this, foreign portfolio investors (FPIs) withdrew Rs 61,973 crore from equities in March 2020. The latest outflow came after a nine-month high investment of Rs 57,724 crore in September 2024, the PTI report elaborated further.

According to data from the depositories, FPIs have consistently bought equities since June after withdrawing Rs 34,252 crore in April-May. Overall, FPIs have been net buyers in 2024 except for January, April and May. 

US elections, movement in interest rates, China stimulus to set the tone for FII flows <o:p></o:p>

Looking ahead, the trajectory of global events like geopolitical developments, interest rate movements, progress in the Chinese economy and the outcome of the US Presidential election will play a crucial role in shaping future foreign investment in Indian equities, Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, said. 

On the domestic front, key indicators like inflation trajectory, corporate earnings, and the impact of festive season demand will also be closely watched by FPIs as they assess opportunities in the Indian market, Srivastava added.

According to the data, FPIs recorded a net outflow of Rs 94,017 crore in October. The intensity of net outflows could be understood from the fact that except for one day FPIs were net sellers throughout the month bringing their total investment for 2024 down to Rs 6,593 crore. This resulted in about an 8 per cent decline in benchmark indices from their peaks. Several factors contributed towards this massive withdrawal of foreign capital from the Indian equity markets in October. 

The major among them is the elevated valuations of Indian equities. This has triggered a shift in investments towards China, where valuations are currently more attractive. Additionally, a series of stimulus measures, aimed at bolstering Chinese economic growth has made Chinese equities increasingly appealing to global investors, Srivastava said.

Despite the massive FPI selling in financials, this sector is resilient since the valuations are fair and every selling is being absorbed by domestic institutional investors (DIIs) and individual investors, particularly high net worth individuals (HNIs), VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said. 

In addition, FPIs pulled out Rs 4,406 crore from the debt general limit and invested Rs 100 crore from the debt Voluntary Retention Route (VRR) during the period under review.&nbsp; So far this year, FPIs invested Rs 1.06 lakh crore in the debt market.

Foreign investors pulled out a massive Rs 94,000 crore (around $11.2 billion) from the Indian stock market in October, making it the worst-ever month in terms of outflows triggered by the elevated valuation of domestic equities and attractive valuations of Chinese stocks according to a report detailed by the Press Trust of India.

Foreign investors pulled out a massive Rs 94,000 crore (around $11.2 billion) from the Indian stock market in October, making it the worst-ever month in terms of outflows triggered by the elevated valuation of domestic equities and attractive valuations of Chinese stocks according to a report detailed by the Press Trust of India. Before this, foreign portfolio investors (FPIs) withdrew Rs 61,973 crore from equities in March 2020. The latest outflow came after a nine-month high investment of Rs 57,724 crore in September 2024, the PTI report elaborated further. According to data from the depositories, FPIs have consistently bought equities since June after withdrawing Rs 34,252 crore in April-May. Overall, FPIs have been net buyers in 2024 except for January, April and May. US elections, movement in interest rates, China stimulus to set the tone for FII flows Looking ahead, the trajectory of global events like geopolitical developments, interest rate movements, progress in the Chinese economy and the outcome of the US Presidential election will play a crucial role in shaping future foreign investment in Indian equities, Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, said. On the domestic front, key indicators like inflation trajectory, corporate earnings, and the impact of festive season demand will also be closely watched by FPIs as they assess opportunities in the Indian market, Srivastava added. According to the data, FPIs recorded a net outflow of Rs 94,017 crore in October. The intensity of net outflows could be understood from the fact that except for one day FPIs were net sellers throughout the month bringing their total investment for 2024 down to Rs 6,593 crore. This resulted in about an 8 per cent decline in benchmark indices from their peaks. Several factors contributed towards this massive withdrawal of foreign capital from the Indian equity markets in October. The major among them is the elevated valuations of Indian equities. This has triggered a shift in investments towards China, where valuations are currently more attractive. Additionally, a series of stimulus measures, aimed at bolstering Chinese economic growth has made Chinese equities increasingly appealing to global investors, Srivastava said. Despite the massive FPI selling in financials, this sector is resilient since the valuations are fair and every selling is being absorbed by domestic institutional investors (DIIs) and individual investors, particularly high net worth individuals (HNIs), VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said. In addition, FPIs pulled out Rs 4,406 crore from the debt general limit and invested Rs 100 crore from the debt Voluntary Retention Route (VRR) during the period under review. So far this year, FPIs invested Rs 1.06 lakh crore in the debt market.

FPIs pull out record Rs 94,000 crore from equities in October on attractive China valuation

Domestic institutional investors (DIIs) have emerged as a stabilising force in the Indian stock market this October, purchasing stocks worth Rs 57,792 crore between October 1 and 11. This significant investment comes in response to a notable retreat by foreign portfolio investors (FPIs), who sold shares amounting to Rs 58,394 crore during the same period. The contrasting activities of these two investor groups have played a crucial role in preventing a major market downturn as detailed in a report by the Indian Express. <o:p></o:p>

The DII buying spree has been particularly pronounced on specific days. On October 3, they acquired stocks worth Rs 12,913 crore, followed by an impressive purchase of Rs 13,245 crore on October 7. In stark contrast, FPIs executed substantial sales, including a staggering Rs 15,243 crore on October 3 alone. As a result of these dynamics, the BSE Sensex experienced a sharp decline of 2,885 points, dropping from 84,266.29 on October 1 to 81,381.36 by October 11.<o:p></o:p>

The resilience of DIIs can be attributed to sustained inflows into equity schemes. In September alone, inflows into equity mutual funds reached Rs 34,419.26 crore, slightly down from Rs 38,239.16 crore in August. The contribution from systematic investment plans (SIPs) also hit an all-time high of Rs 24,508.73 crore in September compared to Rs 23,547.34 crore the previous month. Analysts note that many funds, particularly Life Insurance Corporation (LIC), tend to adopt a contrarian approach by buying when others are selling.<o:p></o:p>

LIC's performance has been noteworthy; it reported a profit of Rs 15,500 crore from the stock market in the June quarter—a year-on-year increase of 13.5 per cent. This trend reflects the corporation's strategy of capitalising on market fluctuations and underscores its pivotal role as a major institutional investor.<o:p></o:p>

The current trend of FPI selling has been influenced by shifting investment strategies favouring Chinese markets over Indian stocks. Following recent monetary and fiscal measures announced by Chinese authorities aimed at stimulating their slowing economy, many FPIs are reallocating funds towards Chinese equities. The Hang Seng index is currently trading at a price-to-earnings ratio of approximately 12, while India's Nifty index stands at around 23 times estimated earnings for FY25. This valuation gap has led some analysts to predict that FPI selling may persist for some time.<o:p></o:p>

Despite the substantial outflows from FPIs, experts believe that the impact on the Indian stock market has been mitigated due to robust DII buying activity. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, remarked that "the massive FPI selling didn’t have a serious impact on the market since the entire FPI selling has been absorbed by DIIs who are receiving sustained fund inflows." He anticipates that this trend of FPI selling coupled with DII purchasing is likely to continue in the near term.<o:p></o:p>

As the financial landscape evolves amid these contrasting investment behaviours, stakeholders will be closely monitoring how these dynamics unfold in the coming weeks and their implications for market stability and growth prospects in India.<o:p></o:p>

Domestic institutional investors (DIIs) have emerged as a stabilising force in the Indian stock market this October, purchasing stocks worth Rs 57,792 crore between October 1 and 11.

Domestic institutional investors (DIIs) have emerged as a stabilising force in the Indian stock market this October, purchasing stocks worth Rs 57,792 crore between October 1 and 11. This significant investment comes in response to a notable retreat by foreign portfolio investors (FPIs), who sold shares amounting to Rs 58,394 crore during the same period. The contrasting activities of these two investor groups have played a crucial role in preventing a major market downturn as detailed in a report by the Indian Express. The DII buying spree has been particularly pronounced on specific days. On October 3, they acquired stocks worth Rs 12,913 crore, followed by an impressive purchase of Rs 13,245 crore on October 7. In stark contrast, FPIs executed substantial sales, including a staggering Rs 15,243 crore on October 3 alone. As a result of these dynamics, the BSE Sensex experienced a sharp decline of 2,885 points, dropping from 84,266.29 on October 1 to 81,381.36 by October 11. The resilience of DIIs can be attributed to sustained inflows into equity schemes. In September alone, inflows into equity mutual funds reached Rs 34,419.26 crore, slightly down from Rs 38,239.16 crore in August. The contribution from systematic investment plans (SIPs) also hit an all-time high of Rs 24,508.73 crore in September compared to Rs 23,547.34 crore the previous month. Analysts note that many funds, particularly Life Insurance Corporation (LIC), tend to adopt a contrarian approach by buying when others are selling. LIC's performance has been noteworthy; it reported a profit of Rs 15,500 crore from the stock market in the June quarter—a year-on-year increase of 13.5 per cent. This trend reflects the corporation's strategy of capitalising on market fluctuations and underscores its pivotal role as a major institutional investor. The current trend of FPI selling has been influenced by shifting investment strategies favouring Chinese markets over Indian stocks. Following recent monetary and fiscal measures announced by Chinese authorities aimed at stimulating their slowing economy, many FPIs are reallocating funds towards Chinese equities. The Hang Seng index is currently trading at a price-to-earnings ratio of approximately 12, while India's Nifty index stands at around 23 times estimated earnings for FY25. This valuation gap has led some analysts to predict that FPI selling may persist for some time. Despite the substantial outflows from FPIs, experts believe that the impact on the Indian stock market has been mitigated due to robust DII buying activity. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, remarked that "the massive FPI selling didn’t have a serious impact on the market since the entire FPI selling has been absorbed by DIIs who are receiving sustained fund inflows." He anticipates that this trend of FPI selling coupled with DII purchasing is likely to continue in the near term. As the financial landscape evolves amid these contrasting investment behaviours, stakeholders will be closely monitoring how these dynamics unfold in the coming weeks and their implications for market stability and growth prospects in India.

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The return of the FIIs

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Foreign investors pull out nearly Rs 20,000 Cr from equities in the last 5 trading sessions

FPIs pull out record Rs 94,000 crore from equities in October on attractive China valuation

Domestic institutional investors step up as foreign portfolio investors retreat

How are global financial markets fairing?

The return of the FIIs