FPIs withdraw ₹3,800cr from Indian equities in November
What's the story
Foreign Portfolio Investors (FPIs) have pulled out a net ₹3,765 crore from Indian equities in November. The withdrawal comes after a brief pause in October when there was a net inflow of ₹14,610 crore, which had broken a three-month streak of withdrawals, ₹23,885 crore in September, ₹34,990 crore in August, and ₹17,700 crore in July.
Market impact
Global factors influencing FPI withdrawals
The withdrawal trend in November was influenced by a mix of global and domestic factors. On the international front, uncertainty over the US Federal Reserve's rate-cut path, a strong US dollar, and weak risk appetite in emerging markets kept foreign investors on edge. Persistent geopolitical tensions and volatile crude oil prices further added to this risk-off sentiment.
Investor caution
Domestic factors contributing to FPI withdrawals
Domestically, the cautious sentiment was worsened by pockets of stretched valuations and subdued industrial indicators. These factors tempered investor conviction despite India's relatively stable macroeconomic backdrop. Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, observed that the outflows in November were mainly driven by global risk aversion and volatility in tech stocks. Sectors like IT services, consumer services and healthcare bore the brunt of this trend.
Market outlook
Uncertainty looms over future FPI flows
Despite the recent trend, there is no clear indication of a reversal in FPI flows. V K Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that FPIs were both buyers and sellers on different days. This suggests that flows could change as conditions evolve. The recent rally with Nifty and Sensex hitting new highs on November 27 after a 14-month wait has improved market sentiment amid improved Q2 corporate earnings and expectations of further growth in Q3/Q4.