Indian Equities See foreign portfolio investors outsourced Rs 28,242 crore in equities, as per data from depositories until May 17.
Foreign investors have withdrawn Rs 28,200 crore from Indian equities this month, surpassing the net pullout of over Rs 8,700 crore in April due to uncertainties and Chinese market valuations.
FPIs’ equity flows are expected to change significantly due to election results, with political stability potentially attracting significant inflows into the Indian market.
Foreign Portfolio Investment in India Post-Lok Sabha Elections
- Potential US Federal Reserve interest rate easing could boost FPI inflows.
- Positive global geopolitical tensions and India’s rising MSCI Emerging Markets Index weight could boost inflows.
- Net outflow of Rs 28,242 crore in equities reported till May 17.
- Reasons for selling include general elections uncertainty and high market valuations.
- FPIs reallocating funds to China and Hong Kong for cheaper valuations.
FPIs’ Selling Triggers
- Outperformance of Hang Seng index in Hong Kong triggered by 19.33% surge.
- Geopolitical crises in Middle East, relative valuation discomfort, and strength of US bond yields cited as reasons.
- FPIs invested Rs 178 crore in debt market during review period.
- Economic challenges and geopolitical tensions causing investor caution.
Foreign Investors’ Outflow in 2024
- Foreign investors invested Rs 13,602 crore in March, Rs 22,419 crore in February, and Rs 19,836 crore in January.
- FPIs withdrew Rs 26,000 crore in equities, investing Rs 45,000 crore in debt market.
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According to data from depositories, foreign portfolio investors experienced a net outflow of Rs 28,242 crore in equities this month (till May 17). The main reasons cited for FPIs selling include uncertainty about the general elections and high market valuations.
Moreover, FPIs are reallocating funds to China and Hong Kong, which offer cheaper valuations compared to Indian stocks, as highlighted by Anirudh Naha, CIO-Alternatives of PGIM India Asset Management.
According to data from depositories, foreign portfolio investors experienced a net outflow of Rs 28,242 crore in equities this month (till May 17). The main reasons cited for FPIs selling include uncertainty about the general elections and high market valuations.
Moreover, FPIs are reallocating funds to China and Hong Kong, which offer cheaper valuations compared to Indian stocks, as highlighted by Anirudh Naha, CIO-Alternatives of PGIM India Asset Management.
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Foreign investors have withdrawn a massive Rs 28,200 crore from Indian equities so far this month, citing uncertainties about the outcome of the general elections and attractive valuations of Chinese markets. This withdrawal surpasses the net pullout of over Rs 8,700 crore in April, attributed to concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in US bond yields.
Before this, FPIs made a net investment of Rs 35,098 crore in March and Rs 1,539 crore in February. Moving forward, there is expected to be a significant change in FPIs’ equity flows in response to election results. Political stability could attract significant inflows into the Indian market, according to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Following the Lok Sabha elections, FPI inflows into India could strengthen due to potential easing of interest rates by the US Federal Reserve, positive resolutions in global geopolitical tensions, and India’s increasing weight in the MSCI Emerging Markets Index, projected to exceed 20 per cent by mid-2024, as noted by Karthick Jonagadla, Manager and founder of Quantace Research.
Foreign investors have withdrawn a massive Rs 28,200 crore from Indian equities so far this month, citing uncertainties about the outcome of the general elections and attractive valuations of Chinese markets. This withdrawal surpasses the net pullout of over Rs 8,700 crore in April, attributed to concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in US bond yields.
Before this, FPIs made a net investment of Rs 35,098 crore in March and Rs 1,539 crore in February. Moving forward, there is expected to be a significant change in FPIs’ equity flows in response to election results. Political stability could attract significant inflows into the Indian market, according to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Following the Lok Sabha elections, FPI inflows into India could strengthen due to potential easing of interest rates by the US Federal Reserve, positive resolutions in global geopolitical tensions, and India’s increasing weight in the MSCI Emerging Markets Index, projected to exceed 20 per cent by mid-2024, as noted by Karthick Jonagadla, Manager and founder of Quantace Research.