₹22,420 crore vanishes from Indian markets. What's spooking foreign investors?

Foreign Portfolio Investors (FPIs) aren’t just dipping out of Indian markets—they’re stampeding. As of mid-November, FPIs have pulled Rs 22,420 crore from India’s stock exchanges, following an even larger October selloff that saw Rs 1,13,858 crore exit the market, according to NSDL data.

The withdrawals are concentrated in the secondary market, with FPIs offloading Rs 32,351 crore through exchanges this month, while still investing selectively in the primary market to the tune of Rs 9,931 crore.

Adding pressure, FPIs have scaled back on Indian debt markets, pulling Rs 4,717 crore so far this month.

“This FPI retreat is driven by three major factors: high valuations in India, earnings downgrade concerns, and the ‘Trump trade,’” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Trump factor has pushed both equity and bond markets into high gear in the U.S., as expectations of corporate tax cuts and business-friendly policies lift stocks, while concerns over fiscal deficit hikes hit bond yields.

The U.S. 10-year bond yield is now hovering at 4.42%, sending ripples through emerging markets like India as capital realigns toward the U.S.

As the exits continue, Indian markets are likely to face further pressure from foreign investors adjusting portfolios in line with these global and domestic shifts.

“The jump in U.S. bond yields has a clear downside for emerging markets, and that’s visible in FPI sell-offs in Indian equities and debt,” Vijayakumar added, underscoring the challenging road ahead.