Foreign Portfolio Investors (FPIs) have turned net sellers in October, offloading shares worth Rs 27,142 crore in the first three trading sessions, driven by escalating tensions between Israel and Iran, rising crude oil prices, and a rebound in Chinese markets.
This outflow follows a nine-month high of Rs 57,724 crore in FPI investments in September. Since June, FPIs had consistently purchased equities after withdrawing Rs 34,252 crore in April and May. Overall, FPIs have been net buyers in 2024, aside from January, April, and May, according to depository data.
Analysts have pinned it on geopolitical developments. Himanshu Srivastava, Associate Director at Morningstar Investment Research India, noted that global factors like geopolitical developments and interest rate trends will be crucial in shaping future foreign investments in Indian equities.
Between October 1 and 4, FPIs withdrew Rs 27,142 crore from equities, with October 2 being a trading holiday.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted that the surge in Chinese stocks has contributed to this selling trend. The Hang Seng index has surged by 26% over the past month, making Chinese markets appear more attractive due to low valuations and potential economic improvements from government stimulus measures.
Srivastava attributed the FPI exodus to worsening geopolitical tensions and the appealing valuations of Chinese stocks. This has resulted in a sharp correction in Indian equity markets.
In the financial sector, significant FPI selling in banking stocks has created buying opportunities for long-term domestic investors.
What about debt markets?
In the debt markets, FPIs withdrew Rs 900 crore through the General Limit while investing Rs 190 crore via the Voluntary Retention Route during the same period.
So far this year, FPIs have invested Rs 73,468 crore in equities and Rs 1.09 lakh crore in the debt market.
(With PTI inputs)