FPIs Remain Bearish On Domestic Equities, Withdraw Rs 14,794 Crore In June So Far

In the Indian debt market, FPIs infused over Rs 4,000 crore, following the bullish sentiment from earlier. The investment in the sector stood at Rs 13,602 crore in March and Rs 22,419 crore in Feb

Foreign portfolio investors (FPIs) continued to be bearish regarding domestic equities in the month so far, impacted by the recent Lok Sabha election results and lucrative valuations of Chinese stocks. The investors dumped equities worth Rs 14,794 crore in the month, as of June 7, while the FPIs infused more than Rs 4,000 crore in the debt market in the period under review.

In the Indian debt market, investors have remained bullish and poured in Rs 13,602 crore in March, Rs 22,419 crore in February, and Rs 19,836 crore in January. This sentiment was driven by the upcoming inclusion of the Indian government bonds in the JP Morgan index.

Before the outflow, the investors remained cautious about Indian equities in May because of election uncertainty and withdrew Rs 25,586 crore. Earlier in April, the net outflow crossed Rs 8,700 crore, reported PTI.

Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Research India, noted, “The general election results in India significantly influenced foreign investor flows in Indian equity markets in June. Last week began optimistically as exit polls indicated a decisive victory for the BJP and the NDA government.”

The expert added that the actual election outcome contradicted the poll expectations and this impacted the market sentiment, leading to a major outflow by the investors. “Foreign investors were also seemingly concerned by the fact that no party could get a clear majority in this parliamentary election, which would have prompted them to adopt a wait and watch approach,” he stated.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, explained, “FPIs regard Indian valuations to be very high and, therefore, capital is getting shifted to cheaper markets. The FPI pessimism regarding Chinese stocks appears to be over and there is a trend of investing in Chinese stocks listed in the Hong Kong Exchange since the valuations of Chinese stocks have turned very attractive.”

Collectively, the investors withdrew Rs 38,158 crore from equities in 2024 so far and infused Rs 57,677 crore in the debt market in the period.