Foreign Portfolio Investors (FPIs) have offloaded Rs 27,142 crore from Indian equities during the first three trading days of October 2024. This significant withdrawal has been attributed to escalating geopolitical tensions, rising crude oil prices, and a robust rebound in the Chinese markets. The outflows mark a stark contrast from the inflows recorded in September when FPIs invested Rs 57,724 crore—the highest in nine months according to a report by The Press Trust of India. <o:p></o:p>

Geopolitical factors and market impact<o:p></o:p>

The intensifying conflict between Israel and Iran has contributed to the ongoing market volatility, pushing crude oil prices higher. The spike in oil prices, combined with uncertainty surrounding the conflict, has shaken investor confidence, leading to substantial FPI withdrawals the PTI report detailed further.&nbsp;

“The geopolitical tensions between Israel and Iran, along with soaring crude prices, have prompted foreign investors to reconsider their positions in Indian equities,” explained Himanshu Srivastava, Associate Director at Morningstar Investment Research India. He also noted that global factors such as interest rate directions and political developments would likely continue to influence foreign investment patterns.<o:p></o:p>

Chinese market outperformance<o:p></o:p>

Another significant factor contributing to the FPI exodus is the recent outperformance of Chinese equities. The Hang Seng Index saw a sharp rise of 26 per cent in the past month, making Chinese stocks more attractive to foreign investors, especially as the Chinese government’s fiscal and monetary stimulus takes effect. <o:p></o:p>

“The surge in Chinese stocks, which are currently undervalued, is a key driver behind the FPIs shifting their focus away from Indian markets,” noted VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. The bullish trend in Chinese markets, combined with higher valuations in India, has further accelerated the FPI outflow.<o:p></o:p>

Sectoral impact and opportunities<o:p></o:p>

Sectors like financial services and banking were hit the hardest by FPI sell-offs. Several frontline banking stocks have seen sharp corrections, presenting potential opportunities for long-term domestic investors. Vijayakumar added, “Despite the sell-off, the current valuations of key banking stocks could provide a good entry point for investors looking at long-term growth.”<o:p></o:p>

The withdrawal also impacted the Indian debt market, where FPIs pulled out Rs 900 crore through the General Limit but invested Rs 190 crore via the Voluntary Retention Route (VRR). Despite the outflows, FPIs remain net buyers in both equities and debt markets for the year, with investments totalling Rs 73,468 crore in equities and Rs 1.09 lakh crore in debt.<o:p></o:p>

Outlook for Indian markets<o:p></o:p>

Looking ahead, experts believe that global macroeconomic factors and geopolitical events will continue to shape FPI inflows and outflows. As the geopolitical landscape evolves and central banks weigh future rate hikes, Indian markets could face continued pressure in the short term. However, domestic investors may benefit from lower valuations, especially in sectors like financials, where FPI exits have been more pronounced.<o:p></o:p>

While the FPI withdrawals in early October may pose challenges for Indian equities, the long-term outlook remains cautiously optimistic, depending on the resolution of geopolitical tensions and global market trends.<o:p></o:p>

Foreign Portfolio Investors (FPIs) have offloaded Rs 27,142 crore from Indian equities during the first three trading days of October 2024. This significant withdrawal has been attributed to escalating geopolitical tensions, rising crude oil prices, and a robust rebound in the Chinese markets.

Foreign Portfolio Investors (FPIs) have offloaded Rs 27,142 crore from Indian equities during the first three trading days of October 2024. This significant withdrawal has been attributed to escalating geopolitical tensions, rising crude oil prices, and a robust rebound in the Chinese markets. The outflows mark a stark contrast from the inflows recorded in September when FPIs invested Rs 57,724 crore—the highest in nine months according to a report by The Press Trust of India. Geopolitical factors and market impact The intensifying conflict between Israel and Iran has contributed to the ongoing market volatility, pushing crude oil prices higher. The spike in oil prices, combined with uncertainty surrounding the conflict, has shaken investor confidence, leading to substantial FPI withdrawals the PTI report detailed further. “The geopolitical tensions between Israel and Iran, along with soaring crude prices, have prompted foreign investors to reconsider their positions in Indian equities,” explained Himanshu Srivastava, Associate Director at Morningstar Investment Research India. He also noted that global factors such as interest rate directions and political developments would likely continue to influence foreign investment patterns. Chinese market outperformance Another significant factor contributing to the FPI exodus is the recent outperformance of Chinese equities. The Hang Seng Index saw a sharp rise of 26 per cent in the past month, making Chinese stocks more attractive to foreign investors, especially as the Chinese government’s fiscal and monetary stimulus takes effect. “The surge in Chinese stocks, which are currently undervalued, is a key driver behind the FPIs shifting their focus away from Indian markets,” noted VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. The bullish trend in Chinese markets, combined with higher valuations in India, has further accelerated the FPI outflow. Sectoral impact and opportunities Sectors like financial services and banking were hit the hardest by FPI sell-offs. Several frontline banking stocks have seen sharp corrections, presenting potential opportunities for long-term domestic investors. Vijayakumar added, “Despite the sell-off, the current valuations of key banking stocks could provide a good entry point for investors looking at long-term growth.” The withdrawal also impacted the Indian debt market, where FPIs pulled out Rs 900 crore through the General Limit but invested Rs 190 crore via the Voluntary Retention Route (VRR). Despite the outflows, FPIs remain net buyers in both equities and debt markets for the year, with investments totalling Rs 73,468 crore in equities and Rs 1.09 lakh crore in debt. Outlook for Indian markets Looking ahead, experts believe that global macroeconomic factors and geopolitical events will continue to shape FPI inflows and outflows. As the geopolitical landscape evolves and central banks weigh future rate hikes, Indian markets could face continued pressure in the short term. However, domestic investors may benefit from lower valuations, especially in sectors like financials, where FPI exits have been more pronounced. While the FPI withdrawals in early October may pose challenges for Indian equities, the long-term outlook remains cautiously optimistic, depending on the resolution of geopolitical tensions and global market trends.

FPI outflows hit Indian equities amid geopolitical tensions, Chinese market surge

With an aim to bolster foreign investment, the Securities and Exchange Board of India (SEBI) is re-evaluating its registration requirements for overseas investors interested in Indian government bonds. This initiative, announced by Ananth Narayan, a whole-time member of SEBI, during an industry conference in Mumbai, marks a crucial step in making the Indian bond market more accessible to foreign investors.<o:p></o:p>

Simplifying registration requirements<o:p></o:p>

SEBI is actively examining the possibility of waiving certain registration requirements for investors who are solely interested in investing in Indian government bonds. "We are actively examining if certain SEBI registration requirements can be done away with for those investors investing solely in Indian government bonds," Narayan told Bloomberg News.<o:p></o:p>

This move is part of SEBI's broader strategy to enhance the ease of doing business for foreign portfolio investors (FPIs) and to draw in high-quality overseas savings.<o:p></o:p>

Rising interest in Indian bonds<o:p></o:p>

The month of August saw a record high of $2.8 billion in net inflows into index-eligible bonds, the highest since JPMorgan Chase &amp; Co. included Indian bonds in its flagship emerging market gauge last year.<o:p></o:p>

This inclusion has increased India's weight in the index from 3 per cent to a projected 10 per cent by March 2025, significantly boosting interest from foreign investors.<o:p></o:p>

Analysts from Morgan Stanley attribute the increased net flows to Indian bonds to several factors, including the rising weight in the emerging market index, the conclusion of election-related uncertainties, and market expectations of a possible Fed rate cut in the upcoming month. These factors have collectively contributed to a more favorable investment climate for foreign investors.<o:p></o:p>

Enhanced support for foreign portfolio investors<o:p></o:p>

To further encourage foreign investment, SEBI is considering an easier application process for sovereign wealth funds and public retail funds that are typically exempt from additional disclosures when seeking registration in India. This move aims to reduce the bureaucratic hurdles faced by these investors, making it more appealing for them to invest in the Indian bond market.<o:p></o:p>

In addition, SEBI has established a dedicated cell to assist foreign portfolio investors. This cell has already reached out to over 500 investors and serves as a window to address any issues that may arise during the registration process. "Ensuring ease of doing investments for FPIs to draw in good quality overseas savings remains a top priority for us," Narayan emphasized.<o:p></o:p>

Further as India continues to emerge as a key player in the global financial landscape, these strategic adjustments by SEBI are poised to make the Indian bond market more attractive to foreign investors. By streamlining the registration process and providing dedicated support, SEBI is sending a clear message that it is committed to fostering a conducive environment for foreign investment.<o:p></o:p>

This initiative is part of a broader effort to integrate India more deeply into global financial markets. With the increasing weight of Indian bonds in emerging market indices and the ongoing simplification of regulatory processes, India is set to become an even more significant destination for foreign capital in the coming years.<o:p></o:p>

Hence, SEBI's decision to ease the registration process for foreign investors in Indian government bonds is a significant step forward in attracting more foreign investment. As the Indian economy continues to grow and integrate into global markets, these measures will play a crucial role in ensuring that the country remains an attractive and accessible destination for overseas investors.<o:p></o:p>

<o:p>&nbsp;</o:p>

With an aim to bolster foreign investment, the Securities and Exchange Board of India (SEBI) is re-evaluating its registration requirements for overseas investors interested in Indian government bonds.

With an aim to bolster foreign investment, the Securities and Exchange Board of India (SEBI) is re-evaluating its registration requirements for overseas investors interested in Indian government bonds. This initiative, announced by Ananth Narayan, a whole-time member of SEBI, during an industry conference in Mumbai, marks a crucial step in making the Indian bond market more accessible to foreign investors. Simplifying registration requirements SEBI is actively examining the possibility of waiving certain registration requirements for investors who are solely interested in investing in Indian government bonds. "We are actively examining if certain SEBI registration requirements can be done away with for those investors investing solely in Indian government bonds," Narayan told Bloomberg News. This move is part of SEBI's broader strategy to enhance the ease of doing business for foreign portfolio investors (FPIs) and to draw in high-quality overseas savings. Rising interest in Indian bonds The month of August saw a record high of $2.8 billion in net inflows into index-eligible bonds, the highest since JPMorgan Chase & Co. included Indian bonds in its flagship emerging market gauge last year. This inclusion has increased India's weight in the index from 3 per cent to a projected 10 per cent by March 2025, significantly boosting interest from foreign investors. Analysts from Morgan Stanley attribute the increased net flows to Indian bonds to several factors, including the rising weight in the emerging market index, the conclusion of election-related uncertainties, and market expectations of a possible Fed rate cut in the upcoming month. These factors have collectively contributed to a more favorable investment climate for foreign investors. Enhanced support for foreign portfolio investors To further encourage foreign investment, SEBI is considering an easier application process for sovereign wealth funds and public retail funds that are typically exempt from additional disclosures when seeking registration in India. This move aims to reduce the bureaucratic hurdles faced by these investors, making it more appealing for them to invest in the Indian bond market. In addition, SEBI has established a dedicated cell to assist foreign portfolio investors. This cell has already reached out to over 500 investors and serves as a window to address any issues that may arise during the registration process. "Ensuring ease of doing investments for FPIs to draw in good quality overseas savings remains a top priority for us," Narayan emphasized. Further as India continues to emerge as a key player in the global financial landscape, these strategic adjustments by SEBI are poised to make the Indian bond market more attractive to foreign investors. By streamlining the registration process and providing dedicated support, SEBI is sending a clear message that it is committed to fostering a conducive environment for foreign investment. This initiative is part of a broader effort to integrate India more deeply into global financial markets. With the increasing weight of Indian bonds in emerging market indices and the ongoing simplification of regulatory processes, India is set to become an even more significant destination for foreign capital in the coming years. Hence, SEBI's decision to ease the registration process for foreign investors in Indian government bonds is a significant step forward in attracting more foreign investment. As the Indian economy continues to grow and integrate into global markets, these measures will play a crucial role in ensuring that the country remains an attractive and accessible destination for overseas investors.

SEBI set to streamline foreign investment in Indian government bonds

India is likely to exempt foreign portfolio investors from an increase in taxes that was part of the budget approved by parliament but heavily criticised, a government official said on Thursday.

The budget provided for increased personal income taxes on those with an annual income of more than 20 million rupees ($283,045).

The official, who declined to be named, said the government will either issue a notification or an executive order, which could be later submitted to parliament for approval, to exempt the foreign portfolio investors, mainly registered as trusts, from the increase in surcharge on super-rich taxpayers

India is likely to exempt foreign portfolio investors from an increase in taxes that was part of the budget approved by parliament but heavily criticised, a government official said on Thursday.

India is likely to exempt foreign portfolio investors from an increase in taxes that was part of the budget approved by parliament but heavily criticised, a government official said on Thursday. The budget provided for increased personal income taxes on those with an annual income of more than 20 million rupees ($283,045). The official, who declined to be named, said the government will either issue a notification or an executive order, which could be later submitted to parliament for approval, to exempt the foreign portfolio investors, mainly registered as trusts, from the increase in surcharge on super-rich taxpayers

India looks to exempt foreign portfolio investors from higher taxes: Government official

Foreign Portfolio Investors (FPIs) withdrew over Rs 5,300 crore from the Indian capital markets in January, indicating their 'wait and watch' approach ahead of the general elections.

Prior to this, they had infused a net sum of over Rs 17,000 crore in the capital markets — equity and debt — during November and December 2018. In October, they had pulled out a massive Rs 38,900 crore.

According to data available with the depositories, FPIs pulled out a net amount of Rs 5,264 crore from equities and Rs 97 crore from the debt markets last month, taking the total outflow to Rs 5,361 crore.

"Investors are taking a cautious approach given their focus on global headwinds and upcoming general election," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

It has not been a good start of the year with regards to FPI flows and clearly, they are continuing with their cautious or 'wait and watch' stance towards India, which they have been maintaining for a long time, said Himanshu Srivastava, Senior Analyst Manager Research at Morningstar Investment Adviser India.

He further said the focus would continue to be on economic growth and the general elections.

Other factors such as movement in crude prices and currency, which would have a bearing on the country's macro-environment, and worries over global trade war will continue to guide the direction of FPI flows, Srivastava added.

Echoing the views, Alok Agarwala, Senior VP and Head Investment Analytics at Bajaj Capital, said FPI flows would continue to be volatile in the coming months.

"The outflows could continue further with escalating trade disputes. The domestic macroeconomic concerns viz, weakness in currency, movement of crude oil prices, trade deficit would also weigh on inflows," he said.

"As a base case scenario, we could expect overall net flows to turn marginally positive in case external conditions improve in the next few months as one of the factors, that is oil prices, corrected sharply in last few months," he added. 
&nbsp;

Foreign Portfolio Investors (FPIs) withdrew over Rs 5,300 crore from the Indian capital markets in January, indicating their 'wait and watch' approach ahead of the general elections.

Foreign Portfolio Investors (FPIs) withdrew over Rs 5,300 crore from the Indian capital markets in January, indicating their 'wait and watch' approach ahead of the general elections. Prior to this, they had infused a net sum of over Rs 17,000 crore in the capital markets — equity and debt — during November and December 2018. In October, they had pulled out a massive Rs 38,900 crore. According to data available with the depositories, FPIs pulled out a net amount of Rs 5,264 crore from equities and Rs 97 crore from the debt markets last month, taking the total outflow to Rs 5,361 crore. "Investors are taking a cautious approach given their focus on global headwinds and upcoming general election," said Vinod Nair, Head of Research, Geojit Financial Services Ltd. It has not been a good start of the year with regards to FPI flows and clearly, they are continuing with their cautious or 'wait and watch' stance towards India, which they have been maintaining for a long time, said Himanshu Srivastava, Senior Analyst Manager Research at Morningstar Investment Adviser India. He further said the focus would continue to be on economic growth and the general elections. Other factors such as movement in crude prices and currency, which would have a bearing on the country's macro-environment, and worries over global trade war will continue to guide the direction of FPI flows, Srivastava added. Echoing the views, Alok Agarwala, Senior VP and Head Investment Analytics at Bajaj Capital, said FPI flows would continue to be volatile in the coming months. "The outflows could continue further with escalating trade disputes. The domestic macroeconomic concerns viz, weakness in currency, movement of crude oil prices, trade deficit would also weigh on inflows," he said. "As a base case scenario, we could expect overall net flows to turn marginally positive in case external conditions improve in the next few months as one of the factors, that is oil prices, corrected sharply in last few months," he added.

Foreign Portfolio Investors pull out Rs 5,300-cr from capital markets in January

Foreign investors have pulled out close to Rs 400 crore from the Indian stock market in the last five trading sessions amid weakness in global equities due to the arrest of a high-profile Chinese executive.

This comes following a net inflow of over Rs 6,900 crore in the equity market by Foreign Portfolio Investors (FPIs) on easing crude oil prices and a strengthening rupee.

According to depositories, FPIs withdrew a net amount of Rs 383 crore from equities from December 3-7.

However, they put in Rs 2,744 crore in the debt markets during the period under review.

After making a spirited comeback in November, FPIs have once again turned net sellers in the Indian equity markets in the month of December.

"In fact, the sell-off was triggered on Thursday, December 6, when FPIs sold net assets worth Rs 361 crore in a single day. This could be largely attributed to the weakness in the global markets due to the arrest of a high-profile Chinese executive which led to a sharp fall in the stock markets globally," said Himanshu Srivastava, Senior Analyst Manager Research, Morningstar Investment Adviser India.

"Investors fear that the relationship between the world's two biggest economies<a href="http://www.wionews.com/world/trump-upbeat-on-china-talks-aides-downplay-huawei-arrest-friction-182381"> US and China&nbsp;</a>could deteriorate following the arrest and hurt economic growth. Consequently, they chose to adopt a cautious stance and shun risky assets, such as their investments in emerging markets like India, which are more susceptible to weak global cues," he added.

The sell-off by FPIs was triggered after Chinese telecom giant<a href="http://www.wionews.com/world/huaweis-meng-wanzhou-faces-us-fraud-charges-linked-to-iran-bail-hearing-continues-monday-182324"> Huawei's CFO Meng Wanzhou</a>, who is also the company founder's daughter, was arrested in Canada for extradition to the US for suspected Iran sanctions violations.

FPIs have pulled out over Rs 85,600 crore from the capital markets so far this year. This includes more than Rs 35,600 crore from equities and Rs 50,000 crore from the debt market.

Foreign investors have pulled out close to Rs 400 crore from the Indian stock market in the last five trading sessions amid weakness in global equities due to the arrest of a high-profile Chinese executive.

Foreign investors have pulled out close to Rs 400 crore from the Indian stock market in the last five trading sessions amid weakness in global equities due to the arrest of a high-profile Chinese executive. This comes following a net inflow of over Rs 6,900 crore in the equity market by Foreign Portfolio Investors (FPIs) on easing crude oil prices and a strengthening rupee. According to depositories, FPIs withdrew a net amount of Rs 383 crore from equities from December 3-7. However, they put in Rs 2,744 crore in the debt markets during the period under review. After making a spirited comeback in November, FPIs have once again turned net sellers in the Indian equity markets in the month of December. "In fact, the sell-off was triggered on Thursday, December 6, when FPIs sold net assets worth Rs 361 crore in a single day. This could be largely attributed to the weakness in the global markets due to the arrest of a high-profile Chinese executive which led to a sharp fall in the stock markets globally," said Himanshu Srivastava, Senior Analyst Manager Research, Morningstar Investment Adviser India. "Investors fear that the relationship between the world's two biggest economies US and China could deteriorate following the arrest and hurt economic growth. Consequently, they chose to adopt a cautious stance and shun risky assets, such as their investments in emerging markets like India, which are more susceptible to weak global cues," he added. The sell-off by FPIs was triggered after Chinese telecom giant Huawei's CFO Meng Wanzhou, who is also the company founder's daughter, was arrested in Canada for extradition to the US for suspected Iran sanctions violations. FPIs have pulled out over Rs 85,600 crore from the capital markets so far this year. This includes more than Rs 35,600 crore from equities and Rs 50,000 crore from the debt market.

FPIs pull out nearly Rs 400 crore in just 5 sessions on global cues