Foreign investors withdrew in the first three trading days of the month Rs 4,285 crore from Indian equities, mainly due to concerns about the upcoming third quarter earnings season and high valuations of domestic stocks.
It follows the investment of According to depository data, Rs 15,446 crore was deposited in the entire December.
The change in sentiment reflects the impact of both global and domestic challenges.
VK Vijayakumar said, “As long as the dollar remains strong and US bond yields provide attractive returns, FPI selling is likely to continue. The dollar index is around 109 and the 10-year bond yield is above 4.5 per cent, which is “There are significant constraints to FPI flows.” said Chief Investment Strategist, Geojit Financial Services.
Based on the data, foreign portfolio investors (FPIs) sold shares worth Rs 4,285 crore inflows into Indian equities during the first three trading days of the month (January 1 to 3).
This persistent trend of outflows highlights uncertainty among foreign investors.
“Investors have adopted a cautious stance ahead of the Q3FY25 earnings season, which has weakened market sentiment. Additionally, apprehensions about US President-elect Donald Trump’s potential economic policies and their impact on global markets have led to a cautious stance. Has increased.” said Srivastava, associate director-manager on research at Morningstar Investment Research India.
The fall in the rupee against the dollar has further weighed on FPI sentiment as currency risk makes Indian investments less attractive.
Adding to this, the US Federal Reserve’s signal of lower rate cuts this year has failed to boost investor confidence.
On the domestic front, FPI selling is mainly due to rich valuations.
“The selling by FPIs is due to high valuations in the secondary market. In the primary market where valuations are reasonable, FPIs have been consistent investors,” Vijayakumar said.
The overall trend indicates a cautious stance of foreign investors, who largely reduced investments in Indian equities in 2024, with net inflows only 427 crores.
This is the exact opposite of extraordinary Net inflows of Rs 1.71 lakh crore in 2023, driven by optimism over India’s strong economic fundamentals. In comparison, 2022 saw a net outflow Rs 1.21 lakh crore amid aggressive rate hikes by global central banks.
