FPI outflows continue in November at Rs 26,533 crore, pace slows 

Foreign investors have withdrawn Rs 26,533 crore from the Indian equity market so far in November, driven by increasing allocations to China, concerns over sluggish corporate earnings, and the high valuation of domestic stocks. 

While the outflows persist, the pace has slowed significantly compared to October, when Foreign Portfolio Investors (FPIs) pulled out a record Rs 94,017 crore ($11.2 billion) on a net basis. 

With this latest withdrawal, net FPI outflows in 2024 have now reached Rs 19,940 crore. 

According to data, FPIs recorded a net outflow of Rs 26,533 crore so far this month (up to November 22), following October's significant outflow of Rs 94,017 crore, the largest monthly pullback in recent history. However, in September, foreign investors made their largest investment in nine months, with Rs 57,724 crore. 

Looking ahead, foreign inflows into Indian equities will likely be influenced by various factors, including policies under Donald Trump’s presidency, inflation and interest rate trends, the geopolitical landscape, and the third-quarter earnings of Indian companies, according to Himanshu Srivastava, Associate Director of Manager Research at Morningstar Investment Research India.  

Concerns over the high valuations of Indian equities are prompting FPIs to seek more attractive opportunities elsewhere, he said. Additionally, China continues to attract substantial foreign investments, aided by its appealing valuation levels and new stimulus measures aimed at reviving its slowing economy. 

India’s weak corporate earnings and high inflation have also raised concerns about delayed domestic interest rate cuts, Srivastava added. 

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted investor worries about FY25 earnings and noted that while the ‘Sell India, Buy China’ trade appears to be over, the ‘Trump trade’ is likely nearing its end, as US valuations have become stretched. 

Sector-wise, FPIs have shown interest in IT stocks, while banking stocks have held up well despite selling pressure, largely supported by domestic institutional investors. 

On the debt market front, FPIs withdrew Rs 1,110 crore from the debt general limit but invested Rs 872 crore in the Voluntary Retention Route (VRR) for debt until November 22. So far in 2024, FPIs have invested Rs 1.05 lakh crore in the Indian debt market.  

(With inputs from PTI)