FPIs pull out over ₹23,880cr from Indian equities in September
What's the story
Foreign portfolio investors (FPIs) continued their selling spree in Indian equities, withdrawing ₹23,885 crore (around $2.7 billion) in September. The outflow has now reached a staggering ₹1.58 lakh crore ($17.6 billion) this year alone. This is the third straight month of withdrawals by FPIs after heavy sell-offs of ₹34,990 crore in August and ₹17,700 crore in July.
Market factors
US trade policy shocks hitting sentiment
The recent sell-off by FPIs has been attributed to a number of factors, including US trade and policy shocks. The Donald Trump administration's decision to impose steep tariffs of up to 50% on Indian goods and a one-time $100,000 H-1B visa fee has hurt sentiment in export-oriented sectors like IT. Further, the rupee hitting record lows has added currency risks for foreign investors.
Investment shift
Investors looking for opportunities in other Asian markets
The high valuations of Indian equities have led investors to look for opportunities in other Asian markets. This trend was highlighted by Himanshu Srivastava, Principal and Manager Research at Morningstar Investment Research India. Despite these outflows, some analysts are cautiously optimistic about the future of FPIs in India, citing reasonable valuations and a strong growth story as potential factors for recovery.
Investment trends
Debt markets see net inflow
Despite the outflow from equities, debt markets have seen a net inflow. FPIs invested roughly ₹1,085 crore under the general limit and ₹1,213 crore through the voluntary retention route in September.