FPI Sell-Off: FPI's Withdraw Rs 3,400 Crore From Indian Stock Market In Just 3 Trading Sessions In November

Foreign Portfolio Investors' (FPIs) selling spree doesn't seem to have ended as the FPI selloff continues. According to a PTI report, FPIs withdrew Rs 3,400 crore from the Indian equity markets in the initial three trading sessions of this month i..e November in the wake of rising interest rates and Middle East conflict. This came after such investors pulled off Rs 24,548 crore in October and Rs 14,767 crore in September, according to the report citing data avaibale with the depositories.

Before the outflow, in the last six months from March to August FPIs were incessantly buying Indian equities and brought in Rs 1.74 lakh crore during the period.

Going ahead, this selling trend is unlikely to continue since the main factors behind FPI selling, the rising bond yields, has reversed as the US Federal Reserve hinted at a dovish stance in its November meeting.
One should note that FPIs have been in selling mode since the start of September.

According to the data available with the depositories, FPIs sold shares to the tune of Rs 3,412 crore during November 1-3. Experts believe that in the current scenario, there could be an enhanced focus on safe-haven assets like gold and US dollars.

Conversely, the debt market attracted Rs 1,984 crore in the period under review after receiving Rs 6,381 crore in October, according to the data.

Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Adviser India, was quoted by PTI as saying that the current approach adopted by FPIs can probably indicate a tactical move by foreign investors to allocate funds to Indian debt in the short term, with an aim to redirect capital into the equity markets when market conditions become more favorable.

Meanwhile, the inclusion of Indian Government bonds in the JP Morgan Government Bond Index Emerging Markets (GBI-EM) also seems to have spurred foreign fund participation in the Indian Bond markets.
With this, the total investment by FPIs in equity has reached Rs 92,560 crore and Rs 37,485 crore in the debt market this year so far, said the report.