The process of withdrawal of foreign investors i.e. FPI from Indian shares has been going on for the last few weeks. This month till October 25, foreign investors have withdrawn Rs 85,790 crore or $ 10.2 billion from Indian stocks. Due to China’s stimulus measures, attractive stock valuations there and higher valuations of stocks at domestic prices, foreign investors are continuously selling in the Indian market. Foreign investors withdrew Rs 5,008 crore from bonds through the general limit and invested Rs 410 crore through the voluntary retention route (VRR). So far this year, FPIs have invested Rs 14,820 crore in shares and Rs 1.05 lakh crore in the bond market.
According to depository data, foreign investors have withdrawn Rs 85,790 crore from the Indian stock market till October 25 this month. Continuous selling by FPIs has affected the market sentiment, due to which NSE’s Nifty has fallen by 8 percent from its highest level. Apart from equity, foreign investors have withdrawn Rs 5,008 crore from bonds during this period through the general limit and invested Rs 410 crore through the voluntary retention route (VRR).
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FPI sold highest number of shares so far in October
The month of October is proving to be the worst in terms of withdrawal from the Indian stock market by foreign investors. There has been the highest withdrawal of foreign investors from Indian shares in a month. Earlier in March 2020, FPIs had withdrawn Rs 61,973 crore from stocks.
In September this year, foreign investors had invested Rs 57,724 crore in the Indian stock market, which is the highest level of their investment in the last 9 months. According to depository data, foreign portfolio investors had been continuous buyers since June. They had definitely withdrawn Rs 34,252 crore in April-May.
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What do experts say
Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, said that future FPI investment in the Indian market will depend on global developments like geo-political status and fluctuations in interest rates. He said that on the domestic front, FPI will keep an eye on the trend of inflation, second quarter results of companies and demand during the festive season.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, said that the continued selling trend of FPIs is unlikely to change immediately. Due to China’s incentive measures, FPIs are turning to the market there. Apart from this, due to high valuations in India, FPIs remain sellers.
