Foreign portfolio investors remained net sellers in October and dumped equities worth Rs 58,711 crore in the month so far. This sentiment was attributed to the increase in conflict between Israel and Iran, a surge in crude oil prices, and robust performance shown by the Chinese market.
Official data from the depositories revealed that the investors withdrew Rs 58,711 crore from Indian equities between October 1-11 this month, while in the debt market, the FPIs pulled out Rs 1,635 crore via the General Limit and infused Rs 952 crore via Voluntary Retention Route (VRR) during the reviewing period, reported PTI.
Prior to the outflow, the investors maintained an optimistic outlook and the investment in September hit a nine-month peak of Rs 57,724 crore. The infusion has been consistently going on since June, after the investors withdrew Rs 34,252 crore in April-May.
In 2024 so far, FPIs have emerged as net buyers, except for January, April, and May. sharing an outlook, Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, noted, “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 investments into the Indian equity markets.”
Meanwhile, Vinit Bolinjkar, Head of Research, Ventura Securities, explained that escalation in global conflicts, specifically in the Middle East region have resulted in an increase in market uncertainty. This has led to risk aversion among global investors and FPIs have now turned cautious and are withdrawing from the emerging markets.
“The geopolitical crisis has also led to a sharp rise in Brent crude oil prices from USD 69 per barrel on Sep 10 to USD 79 per barrel on Oct 10, which poses inflationary risks and increases the fiscal burden for India,” he said.