Foreign Portfolio Investors (FPIs) have shifted from buyers to sellers in the Indian stock markets, pulling out a substantial Rs 4,200 crore in September. According to depository data, FPIs have, as of September 8, withdrawn a net amount of Rs 4,203 crore from Indian shares this month. This move follows a noticeable decline in FPI investments in Indian shares, which hit a four-month low at Rs 12,262 crore in August.
Future Investment Trends
Nitasha Shankar, Chief Investment Advisor at Yes Securities (India) Limited, suggests that the trend of foreign portfolio investors withdrawing from the market might persist over the next one or two weeks. She also emphasizes the importance of monitoring sharp fluctuations in the rupee, which could significantly impact FPI investments in the foreseeable future. Notably, FPIs had been consistently buying Indian shares for the preceding six months, accumulating shares worth an impressive Rs 1.74 lakh crore from March to August.
VK Vijayakumar, the chief investment strategist at Geojit Financial Services, points to rising US bond yields as the primary catalyst for the shift in the September trend. Additionally, he highlights changes in FPI sentiment attributable to the strength of the dollar index.
Himanshu Srivastava, Associate Director-Manager Research at Morningstar India, underscores the primary reason for FPI withdrawals as concerns regarding the global interest rate scenario, particularly in the US, and apprehensions about worldwide economic growth. These concerns stem from broader global economic factors, including surging crude oil prices and the re-emergence of inflation risks.
Bond Market Investments
In addition to their actions in the stock market, FPIs have also invested Rs 643 crore in the debt or bond market during the reviewed period. This brings the total FPI investment in shares for the year to Rs 1.31 lakh crore and in the bond market to Rs 28,825 crore.