Foreign portfolio investors i.e. FPIs have once again turned sellers. They are continuously withdrawing their money from the Indian market. In the last seven days, FPIs have withdrawn over Rs 13,400 crore from the Indian stock market. With such huge selling, foreign portfolio investors who had invested in the Indian market in the last two months have now turned net sellers. According to the depository data, so far this year, FPIs have withdrawn Rs 22,134 crore from the Indian stock market. In such a situation, it is important to know whether foreign investors are losing confidence in the Indian market.
Because of this, most withdrawals
The FPI has made this retreat amid fears of an end to the yen carry trade and a recession in the US. According to experts, the retreat occurred in August due to the closure of the yen carry trade after the Bank of Japan raised interest rates by 0.25 percent and fears of a recession in the US. Apart from this, it rose further due to rising geopolitical tensions, especially the escalating conflict between Israel and Iran. Thanks to this, foreign investors also reduced their risk.
Apart from this, in view of the high valuation of Indian markets, foreign investors are also pulling money out of the market to book profits. Srivastava said that factors such as weak employment data, rising fears of a US recession and uncertainty over the timing of interest rate cuts also led to the pullback from the Indian market.
Fear of continuing to sell in the future.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, if the market remains bullish in the future, foreign investors will be able to sell more. The reason is that the valuation of the Indian stock market remains comparatively high. According to the data, foreign investors have made withdrawals so far in August. In early July, an FPI investment of Rs 32,365 crore had been received due to expectations of strong economic growth, continuation of reforms and better-than-expected corporate results. In June too, due to political stability and sharp rise in markets, there was a net investment of Rs 26,565 crore.
Money was also withdrawn from India in May.
However, by early May, FPIs had withdrawn Rs 25,586 crore due to election shocks and in April, due to changes in India’s tax treaty with Mauritius and concerns over continued rise in US bond yields, FPIs had withdrawn over Rs 8,700 crore. FPIs continuously sold financial services stocks during the fortnight ended July 31. However, during this period, they bought information technology (IT), vehicles, capital products and metals. On the other hand, FPIs have invested Rs 6,261 crore in the debt market so far in August. With this, this figure has reached Rs 97,249 crore in the year 2024.
