Foreign portfolio investors (FPIs) dumped Indian equities worth Rs 94,000 crore in October as it turned out to be the worst-ever month regarding outflows. This sentiment was triggered by the increase in the valuation of domestic equities and lucrative valuations of Chinese stocks.


Official exchange data revealed that investors withdrew Rs 4,406 crore from the debt general limit and infused Rs 100 crore from the debt Voluntary Retention Route (VRR) during the month under review. The net outflow from equities stood at Rs 94,017 crore in October, reported PTI.


In the year so far, the investors poured in Rs 1.06 lakh crore in the debt market. Sharing an outlook, Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, noted, “Looking ahead, the trajectory of global events like geopolitical developments, interest rate movements, progress in the Chinese economy and the outcome of the US Presidential election will play a crucial role in shaping future foreign investment in Indian equities.”


The analyst stated that other factors such as inflation, corporate earnings, and festive season demand will also be keenly observed by the investors as they evaluate the opportunities in the Indian market.


Notably, apart from one day, the FPIs remained net sellers throughout October, bringing their overall investment in 2024 so far down. This consistent sentiment led to nearly 8 per cent plunge in the domestic benchmark indices.


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This massive withdrawal was explained by the elevated valuations seen in Indian equities. “This has triggered a shift in investments towards China, where valuations are currently more attractive. Additionally, a series of stimulus measures, aimed at bolstering Chinese economic growth has made Chinese equities increasingly appealing to global investors,” the expert pointed out.


Further, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, stated, “Despite the massive FPI selling in financials, this sector is resilient since the valuations are fair and every selling is being absorbed by DIIs and individual investors, particularly HNIs.”