Foreign Portfolio Investors Offload ₹22,046 Crore in Indian Equities: Impact on Market and Future Trends

<ul>
    <li>Foreign portfolio investors (FPIs) have turned aggressive sellers in Indian markets ever since reducing their buying momentum with the onset of the new fiscal 2024-25 (FY25).</li>
    <li>FPIs offloaded ₹22,046 crore worth of Indian equities and the total outflow stands at ₹17,848 crore as of May 24, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.</li>
    <li>The total debt inflows stand at ₹2,009 crore so far this month.</li>
</ul>
<p><strong>FPIs remain assertive sellers in Indian equities as net outflow swells to ₹22,046 crore: What's fueling the sell-off?</strong></p>

<h2><strong>FPI Activity in Indian Markets</strong></h2>
<p>In the first week of May, FPIs snapped their April's selling streak and turned net buyers in Indian equities, however, sell-off continued in the debt market. FPIs offloaded ₹8,671 crore in Indian equities last month and ₹10,949 crore in debt markets over high US bond yields. However, they pumped ₹35,098 crore in Indian equities during March 2024 - the highest inflows recorded in the first three months of 2024. FPI outflow initially declined in February 2024 until they were net buyers by the end of the month, despite high US bond yields.</p>

<h3><strong>Debt Market Dynamics</strong></h3>
<p>The inflow into Indian equities stood at ₹1,539 crore in February 2024 and the debt market investment rose to ₹22,419 crore during the month on top of the ₹19,836 crore bought in January. The inclusion of government bonds to JPMorgan and Bloomberg debt indices had especially triggered foreign fund inflows into debt markets. FPIs turned massive sellers in January 2024 snapping their buying streak as investments saw a sharp uptick in December 2023 after they reversed their three-month selling streak in November 2023.</p>

<h3><strong>Impact of Global Cues</strong></h3>
<p>However, inflow intensified in December on strong global cues after the US Federal Reserve signaled the end of its tightening cycle and raised expectations of a rate cut in March 2024. This led to a crash in US bond yields and triggered foreign fund inflows into emerging markets like India.</p>

<h3><strong>Conclusion</strong></h3>
<p>For the entire calendar year 2023, FPIs bought ₹1.71 lakh crore in Indian equities and the total inflow stands at ₹2.37 lakh crore taking into account debt, hybrid, debt-VRR, and equities, according to NSDL data. FPIs' net investment in the Indian debt market stands at ₹68,663 crore during 2023. The aggressive selling by FPIs in the current fiscal indicates a cautious approach towards Indian markets amidst global economic uncertainties and high US bond yields. Investors are advised to stay informed and consult with certified experts before making any investment decisions.</p>