Foreigner Portfolio investors (FPIs) have withdrawn Rs 22,194 crore from Indian stock markets so far this month. FPIs remain sellers amid the possibility of weak quarterly results of companies, strengthening of the dollar and fear of intensification of the tariff war under the Donald Trump administration. Due to this withdrawal of FPI, there is a continuous decline in the stock market. Earlier in the month of December, FPI had invested Rs 15,446 crore in the Indian stock market. Amid headwinds on the global and domestic front, foreign investors have reduced their investments in Indian stocks.
Why are foreign investors withdrawing?
Himanshu Srivastava, associate director-manager research, Morningstar Investment Research India, said, “Many factors are responsible for the withdrawal of foreign funds from Indian markets. These include the possibility of weak quarterly results of companies, possibility of tariff war in the Trump administration, slowness in the growth rate of Gross Domestic Product (GDP), high inflation and confusion about the beginning of the phase of interest rate cuts in India. Apart from this, FPIs are also selling due to record low level of Indian rupee, rise in US bond yield and high valuation of Indian stock market.
Rs 22,194 crore withdrawn this month
According to depository data, foreign portfolio investors have pulled out Rs 22,194 crore from stocks so far this month (till January 10). FPIs have been net sellers in all trading sessions except January 2. “The only major reason for continued selling by FPIs is the sustained rise in the dollar index, which is now above 109,” said VK Vijayakumar, chief investment strategist, Geojit Financial Services. The yield on 10-year bonds is above 4.6 percent, due to which investors are withdrawing from emerging markets. Last year i.e. in 2024, FPIs have made a net investment of only Rs 427 crore in Indian shares. At the same time, in 2023, he had invested a huge amount i.e. Rs 1.71 lakh crore in the Indian stock market.
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