Foreign Portfolio Investors (FPIs) maintained their selling spree for eighth consecutive week, offloading Indian equities worth ₹26,533 crore (about $ 3.14 billion) till November 22 this month, depositories data showed.
However the net outflow so far this month was substantially lower than net selling of ₹94,017 crore recorded in October. The monthly net outflow recorded in October 2024 was the highest ever this calendar year.
So far this calendar year, FPI net selling in Indian equities stood at ₹19,940 crore.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that total FPI selling through the exchanges for the period October 1 through November 22 stood at ₹ 155730 crores ($ 18.5 billion). “This is the kind of selling that happens in a year when FIIs are on selling mode”, he said.
FPI selling in India
He however felt that FPI selling in India is likely to taper off soon and highlighted that the ‘Sell India, Buy China’ trade is over. The Trump trade also appears to be on its last leg since valuations have reached high levels in the US, Vijayakumar added. The concerns around weak Q2 corporate earnings is among the three important factors behind the ongoing FPI selloff, he noted.
Also valuations of largecaps in India have come down from the elevated levels, Vijayakumar added.
Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Research India, said “While the outflows continue, there is a silver lining—the quantum of net outflows has significantly reduced compared to October, when FIIs recorded a massive net selloff of $ 11.19 billion”
This suggests that a significant portion of the outflows may have already been over, he said.
Going ahead, the flows from foreign investors into the Indian equity markets would depend on the policies implemented under Donald Trump’s presidency, the prevailing inflation and interest rate dynamics, the trajectory of the geopolitical landscape, and the third-quarter earnings performance of Indian companies, he added.
Srivastava said that the key factors driving foreign outflows remain largely unchanged. Concerns over the elevated valuations of Indian equities persist, prompting foreign investors to redirect their attention toward markets offering more attractive valuations.
In the recent times, US Dollar has appreciated significantly and so has US Treasury yields. This could have also led foreign investors to invest in US Dollar and US treasuries in anticipation of a stronger US economy in times come, Srivastava noted.