Foreign Portfolio Investors (FPIs) have shifted to net sellers this month so far, withdrawing over Rs 13,400 crore from Indian equities as of early August. This reversal follows a period of increased investment in previous months.
FPIs had injected a total of Rs 22,134 crore into Indian equities earlier this year. However, recent data shows a net withdrawal of Rs 13,431 crore from August 1 to 9, driven by several factors including the unwinding of the yen carry trade and recession concerns in the US.
In July, FPIs had made a significant net investment of Rs 32,365 crore, buoyed by expectations of continued economic growth and favourable earnings. This followed Rs 26,565 crore in June, which was influenced by political stability and a market rebound. Prior to these inflows, FPIs had pulled out Rs 25,586 crore in May and over Rs 8,700 crore in April due to political uncertainties and tax treaty concerns.
The current outflows are attributed to the Bank of Japan’s recent interest rate hike to 0.25% and escalating recession fears in the U.S. Geopolitical tensions, particularly between Israel and Iran, and high valuations in Indian markets also contributed to the selling.
Meanwhile, FPIs have invested Rs 6,261 crore in the Indian debt market so far this month, bringing the total for 2024 to Rs 97,249 crore.
For the fortnight ending July 31, FPIs continued to sell in the financial services sector but were active buyers in IT, autos, capital goods, and metals.
The ongoing uncertainty over U.S. economic conditions and interest rate policies continues to impact investor sentiment and market movements.
(With PTI inputs)