FPIs Sucked Out Rs 25,000 Crore From Indian Equities In January, Highest In One Year
Inflows have slowed from what was witnessed in December 2023, when overseas investors poured in record funds worth Rs 66,135 crore.
Foreign investors turned net sellers in January due to a surge in U.S. Treasury yields and receding hopes of an interest rate cut by the U.S. Federal Reserve in March.
This move comes amid increased geopolitical tensions, reflecting a careful approach by investors even as the market continues to hit fresh record highs.
Inflows have slowed from what was witnessed in December 2023, when overseas investors poured in record funds worth Rs 66,135 crore.
Overseas institutional investors offloaded $3,096 million, or Rs 25,744 crore, worth of stocks in January. This is the highest outflow in one year, according to data from the National Securities Depository Ltd.
Foreign investors have consistently sold off shares in the month of January over the past two years. In January of the previous year, FPIs withdrew Rs 28,852 crore, and a similar trend was seen in 2022, with FPIs pulling out Rs 33,303 crore from the equity market.
Overseas investors offloaded more Indian shares in January than in any other emerging market. According to Bloomberg data, India witnessed outflows worth $3.14 billion during the month.
India was the largest recipient of FPI flows last year among emerging markets. FPIs were sellers in Thailand, the Philippines, Indonesia, Malaysia and Vietnam, Bloomberg data showed.
"FPIs continued to be sellers in the cash market. They were sellers in autos and auto-ancillary, media and entertainment, and marginally in IT. They bought in oil and gas, power and selectively financial services," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
"The rising bond yields in the US is a matter of concern, and this has triggered the recent bout of selling in the cash market. The rally in global stock markets was triggered by the Fed pivot, which saw the 10-year bond yield fall from 5% to around 3.8%. Now the 10-year is back at 4.18%, which indicates that the Fed rate cut will come only in H2 of 2024," Vijayakumar added.
In contrast, the Indian debt market attracted its biggest monthly foreign inflows in over six years in January fuelled by the inclusion of government bonds in the JPMorgan Index.
Foreign portfolio investors infused Rs 19,837 crore in January, according to data from the National Securities Depository Ltd. The previous highest monthly inflow by FPIs was recorded in June 2017, with an inflow of Rs 25,685 crore.
