After being buyers for two consecutive weeks, foreign portfolio investors (FPIs) pulled out Rs 976 crore from Indian stock markets last week. Investor sentiment was affected by a strong US dollar and rising yields on 10-year bonds in the US. Foreign portfolio investors started the week on a positive note, according to data from National Securities Depository Ltd. They invested Rs 3,126 crore in shares during the first two trading sessions (December 16-20). However, there was a change in his stance later and he withdrew more than Rs 4,102 crore in three sessions.
Thus, during the week he withdrew a net amount of Rs 976 crore from Indian stocks. However, despite this, the trend of FPI remains positive in December. They have infused Rs 21,789 crore into the Indian stock market during the month.
Why are FPIs adopting a cautious approach
Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, said FPIs are adopting a cautious approach amid uncertainty over the outcome of the US central bank Federal Reserve meeting and future policy review. The Federal Reserve has cut interest rates for the third time this year, but has hinted at only two rate cuts in 2025. This affected the sentiment of investors and selling started in the global market.
He said that apart from this, the confidence of foreign investors has been weakened due to high valuations, weak September quarter results of companies, estimates of weak December results, slow pace of GDP growth and fall in the rupee.
Market cap of top 10 Sensex companies decreased by ₹ 5 lakh crore, TCS and RIL suffered the most loss.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that FPIs are selling due to the strength in the dollar index and increase in the yield on 10-year bonds. Issues related to India such as concerns about growth and second quarter results of companies not being as per expectations have also affected the sentiment of FPI.
Was a seller in October and November
Earlier in November, FPI had made a huge withdrawal of Rs 21,612 crore from Indian stocks and in October, Rs 94,017 crore. Interestingly, FPIs had made a net investment of Rs 57,724 crore in Indian stock markets in September, which was a 9-month high. Depository data shows that FPI investment in Indian stock markets so far in 2024 has stood at Rs 6,770 crore.
