FPI Sell-Off: Foreign investors exhibited a consistent divestment pattern in Indian equities during October 2024. The trend reflects foreign investors’ strategic shift towards alternative investment destinations, including China. As of October 21, India witnessed a significant net outflow of Rs 82,845 crore in Foreign Portfolio Investments (FPI) from Indian bourses, according to NSDL data.

Notably, Foreign Investors were net buyers in Indian equities from June to September, with inflows of Rs 57,724 crore in September, Rs 7,320 crore in August, Rs 32,365 crore in July and Rs 26,565 crore in June. Foreign Investors were net sellers in May 2024, divesting Indian equities worth Rs 25,586 crore. In addition to May, April 2024 also experienced an FPI outflow of Rs 8,671 crore. Foreign Investors were net buyers in March and February, investing Rs 35,098 crore and Rs 1,539 crore, respectively.

Foreign investors initiated 2024 with a significant sell-off, divesting Rs 25,744 crore in January, resulting in a net investment of Rs 22,909 crore year-to-date. The Foreign Investors infused a net amount of Rs 1,71,107 crore into Indian equities in 2023.

FPI Sell-Off: What’s Behind the Drop?

The October outflows of Foreign Investment from Indian equities can be attributed to multiple factors, including anticipated weak Q3 performance of Indian companies, escalating Iran-Israel tensions, and weak performance of Indian stocks, which cumulatively impacted investor sentiment.

Experts believe that despite recent corrections, Indian equities remain overvalued, with current prices potentially disconnected from fundamental performance indicators. According to the experts, due to prevailing negative market sentiment, a swift and prolonged recovery seems unlikely.

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