FPIs withdraw ₹4,285 crore in 3 trading sessions amid high valuations, global headwinds | Stock Market News
Source: Live Mint
In the first three trading days of the month, foreign investors withdrew ₹4,285 crore from Indian equities, primarily due to concerns surrounding the upcoming third-quarter earnings season and the high valuations of domestic stocks.
This follows an investment of ₹15,446 crore throughout December, according to data from depositories.
The change in sentiment reflects the impact of both global and domestic challenges.
“FPIs are likely to continue selling as long as the dollar remains strong and US bond yields offer attractive returns. The dollar index at around 109 and the 10-year bond yield above 4.5 per cent are significant deterrents to FPI flows,” V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
Based on the data, Foreign Portfolio Investors (FPIs) sold shares worth ₹4,285 crore in Indian equities during the first three trading days of the month (January 1 to 3).
This persistent trend of outflows highlights the uncertainty among foreign investors.
“Investors have adopted a cautious stance ahead of the Q3FY25 earnings season, contributing to subdued market sentiment. Additionally, apprehensions surrounding the potential economic policies of US President-elect Donald Trump and their implications for global markets have added to the cautious approach,” Himanshu Srivastava, Associate Director-Manage on Research at Morningstar Investment Research India, said.
A depreciating rupee against the dollar has further weighed on FPI sentiment, as the currency risk makes Indian investments less attractive.
Compounding this, the US Federal Reserve’s indication of fewer rate cuts this year has failed to lift investor confidence.
On the domestic front, FPIs selling is primarily due to rich valuations.
“FPIs selling is due to high valuations in the secondary market. In the primary market where the valuations are fair, FPIs have been sustained investors,” Vijayakumar said.
The overall trend indicates a cautious approach by foreign investors, who scaled back investments in Indian equities significantly in 2024, with net inflows of just ₹427 crore.
This contrasts sharply with the extraordinary ₹1.71 lakh crore net inflows in 2023, driven by optimism over India’s strong economic fundamentals. In comparison, 2022 saw a net outflow of ₹1.21 lakh crore amid aggressive rate hikes by global central banks.
