The National Securities Depository Limited (NSDL) reports that during the week of January 20–24, FPIs sold stocks valued at ₹19,759 crore.
The report also showed that FPIs took out ₹64,156 crore from Indian markets in January alone.
Donald Trump’s comeback to the American political scene has increased investor confidence in the US economy, which is partly responsible for this ongoing selling. The US is now a more desirable place to invest due to the favorable perception of Trump’s leadership and his initiatives to enhance the quality of life for the typical American.
A stronger US currency and rising interest rates on US Treasury bonds are further factors contributing to the flow of money back to the US. Investors from around the world have been drawn to rising economies like India as a result of these considerations.
The Indian rupee has suffered greatly as a result of this massive money outflow, losing value in relation to the US dollar. FPI outflows have been exacerbated by the rupee’s depreciation, which has led to a cycle of continuous selling in Indian markets. Foreign investors have also been put off by rising valuations in Indian markets as well as slower earnings growth.
Akshay Chinchalkar, Head of Research, Axis Securities said
“On a ytd basis, foreigners have withdrawn close to $7B. Higher valuations within the region despite slowing earnings, Trump getting a second term and his efforts to improve the life of the average American, US treasury bonds offering attractive interest rates and a rising dollar are the most important reasons why money is flowing back into the US at the expense of the Indian investor”.
In addition to having an effect on the Indian stock market, FPIs’ frequent selling raises questions about the state of the economy as a whole. Market players in India are closely monitoring events in the US and other major nations as global variables continue to impact investment behavior.
The figures for the most recent month, December, however, showed that FPIs’ net investment in Indian stocks remained positive at ₹15,446 crore.
Although 2024 ended on a good note, FPIs’ net purchasing value of Indian stocks fell sharply to ₹427 crore.
In 2024, the nation had a sharp decline in Foreign Portfolio Investment (FPI) inflows, with net investments dropping by 98% from the year before. The US economy’s dominance in international markets was one of the main causes of this downturn.
