Foreign investors have pulled out ₹44,396 crore from Indian equities in January, marking a stark reversal from the previous month’s investment of ₹15,446 crore. The outflows are attributed to a stronger U.S. dollar, rising U.S. bond yields, and expectations of a weak earnings season in India.
According to data from the depositories, Foreign Portfolio Investors (FPIs) have been net sellers of Indian stocks for most of January, except for January 2. The significant pullback reflects a shift in sentiment, with global economic concerns weighing heavily on investor confidence.
The rise in U.S. bond yields, which have become more attractive compared to Indian equities, has driven FPIs to reduce their exposure not only to the Indian stock market but also to the debt market. FPIs withdrew ₹4,848 crore from the debt general limit and ₹6,176 crore through the debt voluntary retention route.
The cautious approach by FPIs follows a significant dip in investments in Indian equities over the past year. For 2024, net inflows amounted to just ₹427 crore, a stark contrast to the ₹1.71 lakh crore net inflows seen in 2023, driven by optimism around India’s economic strength.
In comparison, 2022 experienced a net outflow of ₹1.21 lakh crore, largely due to aggressive interest rate hikes by central banks across the globe.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Jan 20, 2025, 12:39 PM IST
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