According to the data, FPIs made a net withdrawal of Rs 58,711 crore from stocks between October 1 and 11. (Representative image)
Foreign investors turned net sellers in October, pulling shares worth Rs 58,711 crore in the month so far due to the escalating conflict between Israel and Iran
Foreign investors turned net sellers in October, offloading shares worth Rs 58,711 crore in the month so far due to the escalating conflict between Israel and Iran, a sharp rise in crude oil prices and a strong performance in the Chinese market.
The outflow came after a nine-month high investment of Rs 57,724 crore in September.
Since June, foreign portfolio investors (FPIs) have been steadily buying stocks after withdrawing Rs 34,252 crore in April-May. Overall, FPIs were net buyers in 2024, except for January, April and May, depository data showed.
Looking ahead, global factors such as geopolitical developments and the future direction of interest rates will play a crucial role in determining the flow of foreign investment into Indian equity markets, said Himanshu Srivastava, associate director, management research, Morningstar Investment Research India.
According to the data, FPIs made a net withdrawal of Rs 58,711 crore from stocks between October 1 and 11.
“Escalating conflicts, particularly in the Middle East between Israel and Iran, have increased market uncertainty, leading to risk aversion among global investors. FPIs have become cautious and are pulling money out of emerging markets,” said Vinit Bolinkar, head of research at Ventura Securities.
The geopolitical crisis also led to a sharp rise in Brent crude oil prices from USD 69 per barrel on September 10 to USD 79 per barrel on October 10, creating inflationary risks and increasing the fiscal burden on India, he added.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, believes that FPIs have followed a ‘Sell India, Buy China’ strategy after the Chinese authorities announced monetary and fiscal measures to boost the slowing Chinese economy. FPI money has moved into Chinese stocks, which are cheap even now.
Together, these developments created a temporary headwind in Indian equities, reflected in FPI outflows in both debt and equity segments.
These trends are expected to stabilize around the time of the US election, said Pankaj Singh, small case manager and founder and principal researcher at Smartwealth.ai.
In the debt markets, FPIs withdrew Rs 1,635 crore through the general limit and invested Rs 952 crore through voluntary retention route (VRR) during the period under review.
So far this year, FPIs have invested Rs 41,899 crore in equities and Rs 1.09 lakh crore in the debt market.
(This story was not edited by News18 staff and was published by a syndicated news agency feed – PTI)
