FPIs Remain Wary, Dump Indian Equities Worth Rs 4,285 Crore In First 3 Sessions Of Jan

The experts said that investors have adopted a vigilant stance prior to the Q3FY25 earnings season and this has resulted in a muted market sentiment.

This outflow followed an infusion of Rs 15,446 crore seen in the month of December, official data with the depositories revealed.

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Foreign portfolio investors reversed the sentiment and dumped Indian equities in the first three trading sessions of the New Year and the month. The investors withdrew Rs 4,285 crore from the segment from January 1-3, 2025, due to concerns regarding the upcoming third-quarter earnings season and elevated valuations of domestic stocks.

This outflow followed an infusion of Rs 15,446 crore seen in the month of December, official data with the depositories revealed, reported PTI. This change in sentiment was attributed to global and domestic headwinds. 

Commenting on the flow ahead, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services noted, “FPIs are likely to continue selling as long as the dollar remains strong and US bond yields offer attractive returns. The dollar index at around 109 and the 10-year bond yield above 4.5 per cent are significant deterrents to FPI flows.”

The experts said that investors have adopted a vigilant stance prior to the Q3FY25 earnings season and this has resulted in a muted market sentiment. Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Research India, pointed out that investors are also wary of the possible economic policies of the US President-elect Donald Trump and how these will imapct the global markets. Therefore, they have adopted the cautious approach.

Vijayakumar added that the weakening rupee against the US dollar has added on to the worries for FPIs, making Indian investments less lucrative. “Compounding this, the US Federal Reserve's indication of fewer rate cuts this year has failed to lift investor confidence. On the domestic front, FPIs selling is primarily due to rich valuations. FPIs selling is due to high valuations in the secondary market. In the primary market where the valuations are fair, FPIs have been sustained investors,” he explained.

The net inflows in 2024 touched Rs 427 crore. This cautious trend stands in complete contrast with the net inflows of Rs 1.71 lakh crore seen in 2023.