Thu. Sep 28th, 2023
    Foreign Portfolio Investors Withdraw ₹4,800 Crore from Indian Equities in September

    Foreign portfolio investors (FPIs) have pulled out approximately ₹4,800 crore from Indian equities in the first half of September due to various factors, including rising US bond yields, a stronger dollar, and concerns over global economic growth. This comes after FPIs continuously bought Indian equities from March to August, bringing in a significant amount of ₹1.74 lakh crore during that period.

    Chief Investment Strategist at Geojit Financial Services, V K Vijayakumar, predicts that FPIs are likely to continue selling in the coming days as the market is at record highs and valuations are high. The high bond yields in the US (with the 10-year yield at 4.28 percent) and the dollar index above 105 also contribute to the selling pressure.

    According to data from the depositories, FPIs have withdrawn a net sum of ₹4,768 crore from equities in September. This includes both bulk deals and investments through the primary market. In August, FPI investment in equities had already reached a four-month low of ₹12,262 crore.

    The main reasons behind the outflow are the uncertainties surrounding the global interest rate landscape, particularly in the United States, and concerns about global economic growth. Factors such as surging crude oil prices, the reemergence of inflation risks, and the possibility of an interest rate hike in the US have made investors more cautious and prompted a “wait-and-watch” approach.

    Despite the FPI withdrawals, the Indian market remained unaffected as the selling pressure was neutralized by domestic institutional investors. Additionally, the hyperactivity of retail investors has contributed to the bullishness in the market.

    On the other hand, FPIs have invested over ₹2,000 crore in the country’s debt market during the same period. This brings their total investment in equity to ₹1.3 lakh crore and over ₹30,200 crore in the debt market this year.

    In terms of sectors, FPIs have consistently been buying capital goods and power. While the current FPI withdrawals have raised concerns, experts believe that India’s economic fundamentals remain robust. They expect FPIs to transition into buyers in the coming months, indicating India’s resilience as an investment destination.


    – Geojit Financial Services
    – Morningstar India
    – Craving Alpha

    – Definitions:
    – FPIs: Foreign Portfolio Investors refers to overseas investors who invest in the financial markets of a foreign country.
    – Equities: Also known as stocks or shares, equities represent ownership in a company and provide the holder with a claim on its assets and earnings.
    – Bond yields: The interest rates earned on government or corporate bonds.
    – Dollar index: A measure of the value of the US dollar relative to a basket of foreign currencies.
    – Debt market: A market where securities, such as bonds, are bought and sold for the purpose of borrowing or lending money.
    – Domestic institutional investors: Institutional investors based in the country where the investments are being made, such as insurance companies, pension funds, and mutual funds.