Last update:03 November 2024, 12:43 IST

Looking ahead, the trajectory of global events such as geopolitical developments, interest rate movements, progress in the Chinese economy and the outcome of the US presidential election will play a crucial role in shaping future foreign investment in Indian equities.

FPIs saw a net outflow of Rs 94,017 crore in October.

Foreign investors pulled a massive 94,000 crore rupees (about $11.2 billion) out of the Indian stock market in October, making it the worst month for outflows, triggered by high valuation of domestic stocks and valuations attractiveness of Chinese stocks. Prior to this, foreign portfolio investors (FPIs) withdrew Rs 61,973 crore from stocks in March 2020.

The latest exit came after a nine-month investment high of Rs 57,724 crore in September 2024.

Since June, FPIs have been steadily buying stocks after withdrawing Rs 34,252 crore in April-May. Overall, FPIs were net buyers in 2024, except in January, April and May, data with depositories showed.

Looking ahead, the trajectory of global events such as geopolitical developments, interest rate movements, progress in the Chinese economy and the outcome of the US presidential election will play a crucial role in shaping future foreign investment in Indian equities, Himanshu Srivastava, Associate Director, Manager Research, said Morningstar Investment Research India.

On the domestic front, key indicators such as the trajectory of inflation, corporate earnings and demand impact during the festive season will also be closely watched by FPIs as they assess opportunities in the Indian market, he added.

According to the data, FPIs saw a net outflow of Rs 94,017 crore in October. The intensity of the net outflows could be gauged from the fact that, barring one day, the FPIs were net sellers throughout the month, reducing their total investment for 2024 to Rs 6,593 crore.

This relentless selling has resulted in the benchmark indices down about 8% from their peaks.

Several factors contributed to this massive withdrawal of foreign capital from Indian equity markets in October.

Chief among them is the high valuations of Indian stocks. This has triggered a shift in investment to China, where valuations are currently more attractive. In addition, a series of stimulus measures aimed at supporting Chinese economic growth has made Chinese stocks increasingly attractive to global investors, Srivastava said.

Despite the massive selling of FPIs in financials, this sector is resilient as valuations are right and every sale is absorbed by DIIs and individual investors, especially HNIs, said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

In addition, the FPIs withdrew Rs 4,406 crore from the general debt limit and invested Rs 100 crore from the Voluntary Debt Retention Route (VRR) during the period under review.

So far this year, FPIs have invested 1.06 million lei in the debt market.

(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI)