After two consecutive weeks of buying in December, foreign investors i.e. FPI have withdrawn Rs 976 crore from Indian stock markets last week. Investor sentiment was affected by the strong US dollar and rising 10-year bond yields in the US.
According to National Securities Depository data, foreign portfolio investors started the week on a positive note. During the first two trading sessions (December 16-20), he invested Rs 3,126 crore in shares. However, later his stance changed and he withdrew more than Rs 4,102 crore in three sessions. In this way, during the week they made a net withdrawal of Rs 976 crore. However, despite this, the trend of FPIs remained positive in December and they poured Rs 21,789 crore into the Indian stock market during the month.
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Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, said that FPIs are adopting a cautious approach amid uncertainty regarding the outcome of the US central bank Federal Reserve meeting and future policy review. He said that the Federal Reserve has cut the interest rate by 0.25 percent for the third time this year, but it has indicated less rate cuts in the future, which affected investor sentiment and triggered selling in the global market. He said that apart from this, the confidence of foreign investors has weakened due to high valuations, weak September quarter results of companies, estimates of weak December results, slow pace of Gross Domestic Product (GDP) growth and falling rupee.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that FPIs are selling due to the strengthening of the dollar index and rising yields on 10-year bonds. He said that India-related issues such as concerns about growth and companies’ second quarter results not being as per expectations have also affected the sentiment of FPIs.
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Earlier in November, FPI had made huge withdrawal of Rs 21,612 crore and in October, Rs 94,017 crore. Interestingly, in September, FPIs had made a net investment of Rs 57,724 crore in the Indian stock markets, which is a nine-month high. Depository data shows that so far in 2024, FPI investment in Indian stock markets has been Rs 6,770 crore.
