Introduction:

Foreign portfolio investors (FPIs) have recently withdrawn approximately ₹4,800 crore from Indian equities in the first half of September. This trend is attributed to the rise in US bond yields, a stronger dollar, and growing concerns over global economic growth. Despite consistent influxes of ₹1.74 trillion from March to August, FPIs are now showing signs of selling due to record-high market levels and elevated valuations, as highlighted by V. K. Vijayakumar, the chief investment strategist at Geojit Financial Services.

Global Factors Impact Investor Sentiment:

The withdrawal of FPI investments in September is influenced by various macroeconomic factors. Heightened bond yields in the US, with the 10-year yield at 4.28%, and a dollar index above 105 have prompted FPIs to sell holdings. Data from depositories reveals a net outflow of ₹4,768 crore from equities, including bulk deals and primary market investments, so far this month.

Broader Concerns Over Global Economic Growth:

According to Himanshu Srivastava, associate director – Manager Research at Morningstar India, the outflow of funds in September is driven by uncertainties in the global interest rate landscape, particularly in the US, and concerns surrounding global economic growth. Rising crude oil prices and the re-emergence of inflation risks further contribute to these worries. Investor caution has led to a “wait-and-watch” approach in anticipation of a potential interest rate hike in the US and its impact on the global economy.

India’s Resilience in the Investment Landscape:

While the recent FPI withdrawals raise concerns, it’s essential to consider them within the broader context of global financial dynamics. Mayank Mehraa, small case manager and principal partner at Craving Alpha, emphasizes that India’s resilience as an investment destination is evidenced by the potential for FPIs to transition into buyers in the coming months. As global conditions evolve and India’s robust economic fundamentals persist, there are positive prospects for the markets in the near future.

In conclusion, the current withdrawal of FPI investments from Indian equities is a response to global economic uncertainties. However, India’s strength as an investment destination remains intact, and with improving conditions, the market outlook remains positive.

Disclaimer:

The information provided in this article is based on the latest Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and other applicable material available at the time of compilation. We have diligently ensured the completeness and accuracy of the material. However, it is essential for users to consult the relevant legislation for specific guidance. Please note that the data provided may be subject to change without prior notice and should not be considered as professional advice. Estabizz Fintech holds no liability for any outcomes resulting from the use of this material.