The strength of the currency, rising US bond yields, and prospects of a dismal earnings season have caused foreign investors to withdraw Rs 44,396 crore from Indian stocks this month. According to data from the depositories, this followed an investment of Rs 15,446 crore in December. The change in attitude coincides with both internal and international challenges.
Foreign investors are withdrawing their money from the Indian equity markets due to the severe strain the ongoing devaluation of the Indian rupee is putting on them.
Investors are also becoming cautious due to the greater valuation of Indian stocks, even in light of recent losses, the anticipation of a dismal earnings season, and the uncertainty surrounding the rate of economic development. The data shows that as of this month (through January 17), Foreign Portfolio Investors (FPIs) had sold shares in Indian stocks for Rs 44,396 crore. Except for January 2, FPIs have been sellers every day this month.
A possible reversal in foreign direct investment (FPI) flows into India could result from cyclical improvements in corporate earnings, robust GDP growth fueled by solid local consumption, and more government spending on infrastructure projects.
With net inflows of just Rs 427 crore in 2024, foreign investors dramatically reduced their investments in Indian equities, indicating a cautious posture generally. This starkly contrasts 2023’s exceptionally high net inflows of Rs 1.71 lakh crore, which were fueled by optimism about India’s solid economic foundation. Compared to 2022, when global central banks aggressively raised interest rates, there was a net outflow of Rs 1.21 lakh crore.
