New Delhi: Foreign investors have pulled out a massive Rs 28,200 crore from Indian equities so far this month due to uncertainties over general election results and attractive valuations in Chinese markets.
The withdrawals were much higher than the net outflow of over Rs 8,700 crore in April due to changes in India's tax treaty with Mauritius and concerns over the continued rise in US bond yields.
Earlier, FPI had made a net investment of Rs 35,098 crore in March and Rs 1,53 crore in February.
Going forward, there are likely to be dramatic changes in equity flows from foreign portfolio investors (FPIs) in response to the election results.
V Vijayakumar, chief investment strategist at Geojit Financial Services, said political stability will attract large investments in the Indian market.After the Lok Sabha elections, FPI inflows into India may strengthen due to three key factors – possible cut in interest rates by the US Federal Reserve, positive resolution in global geopolitical tensions and India's increasing weighting in the MSCI Emerging Markets Index. 20 percent by mid-2024, said Karthik Jonagadla, smallcase manager and founder of Quantac Research.
Foreign portfolio investors experienced a net outflow of Rs 28,242 crore in equities this month (till March 17), according to depository data.
There are two main reasons for selling by FPIs in FY 2025. First, there is uncertainty regarding the general elections.FPIs generally don't like uncertainty, they like to play it safe and lock in last year's profits. Second, market valuations are high, said Sunil Damani, chief investment officer, MojoPMS.
Additionally, FPIs are allocating funds to China and Hong Kong, which are trading at attractive (cheap) valuations compared to Indian stocks, said Anirud Naha, CIO-Alternatives, PGIM India Asset Management.
Vijayakumar believes the main reason for FPI selling is the better performance of the Hang Seng Kong index, which has gained 19.33 per cent in the last one month. They are moving money from expensive markets like India to cheap markets like Hong Kong.Additionally, Vipul Bhowar, director of listed investments at Waterfield Advisors, said the FPI withdrawal can be attributed to the ongoing geopolitical crisis in the Middle East, relative valuation discomfort and The strength of US bond yields.
On the other hand, FPIs invested Rs 178 crore in the debt market during the period under review.
Bharat Dhawan, managing partner of Mazars in India, said, “It is not surprising that FPI volatility is due to economic challenges such as recessionary pressures and inflation concerns as well as geopolitical tensions. This situation has alerted investors. have given.,
Before this outflow, foreign investors had invested Rs 13,602 crore in March, Rs 22,419 crore in February and Rs 19,836 crore in January. The inflows were driven by the upcoming inclusion of Indian government bonds in the JP Morgan index.
JPMorgan Chase & Co had announced in September last year that it would include Indian government bonds in its benchmark emerging markets index from June 2024. This historic inclusion is expected to benefit India by attracting approximately US$20-40 billion over the next 18 to 24 months. , ,
Overall, FPIs pulled out a net amount of Rs 26,000 crore from equities in the decade to 2024.However, they invested Rs 45,000 crore in the debt market.
The withdrawals were much higher than the net outflow of over Rs 8,700 crore in April due to changes in India's tax treaty with Mauritius and concerns over the continued rise in US bond yields.
Earlier, FPI had made a net investment of Rs 35,098 crore in March and Rs 1,53 crore in February.
Going forward, there are likely to be dramatic changes in equity flows from foreign portfolio investors (FPIs) in response to the election results.
V Vijayakumar, chief investment strategist at Geojit Financial Services, said political stability will attract large investments in the Indian market.After the Lok Sabha elections, FPI inflows into India may strengthen due to three key factors – possible cut in interest rates by the US Federal Reserve, positive resolution in global geopolitical tensions and India's increasing weighting in the MSCI Emerging Markets Index. 20 percent by mid-2024, said Karthik Jonagadla, smallcase manager and founder of Quantac Research.
Foreign portfolio investors experienced a net outflow of Rs 28,242 crore in equities this month (till March 17), according to depository data.
There are two main reasons for selling by FPIs in FY 2025. First, there is uncertainty regarding the general elections.FPIs generally don't like uncertainty, they like to play it safe and lock in last year's profits. Second, market valuations are high, said Sunil Damani, chief investment officer, MojoPMS.
Additionally, FPIs are allocating funds to China and Hong Kong, which are trading at attractive (cheap) valuations compared to Indian stocks, said Anirud Naha, CIO-Alternatives, PGIM India Asset Management.
Vijayakumar believes the main reason for FPI selling is the better performance of the Hang Seng Kong index, which has gained 19.33 per cent in the last one month. They are moving money from expensive markets like India to cheap markets like Hong Kong.Additionally, Vipul Bhowar, director of listed investments at Waterfield Advisors, said the FPI withdrawal can be attributed to the ongoing geopolitical crisis in the Middle East, relative valuation discomfort and The strength of US bond yields.
On the other hand, FPIs invested Rs 178 crore in the debt market during the period under review.
Bharat Dhawan, managing partner of Mazars in India, said, “It is not surprising that FPI volatility is due to economic challenges such as recessionary pressures and inflation concerns as well as geopolitical tensions. This situation has alerted investors. have given.,
Before this outflow, foreign investors had invested Rs 13,602 crore in March, Rs 22,419 crore in February and Rs 19,836 crore in January. The inflows were driven by the upcoming inclusion of Indian government bonds in the JP Morgan index.
JPMorgan Chase & Co had announced in September last year that it would include Indian government bonds in its benchmark emerging markets index from June 2024. This historic inclusion is expected to benefit India by attracting approximately US$20-40 billion over the next 18 to 24 months. , ,
Overall, FPIs pulled out a net amount of Rs 26,000 crore from equities in the decade to 2024.However, they invested Rs 45,000 crore in the debt market.
