scorecardresearchFPIs turn net sellers; withdraw ₹4,200 crore in equities in Sep so far

FPIs turn net sellers; withdraw 4,200 crore in equities in Sep so far

Updated: 10 Sep 2023, 12:30 PM IST

Foreign investors pull out 4,200 crore from Indian equities in September due to rising US bond yields and a stronger dollar.

FPIs turn net sellers, pull out  <span class='webrupee'>₹</span>4,200 crore from equities in September on rising US bond yields

FPIs turn net sellers, pull out 4,200 crore from equities in September on rising US bond yields

(PTI) After six months of consistent buying, foreign portfolio investors (FPIs) have turned net sellers to pull out 4,200 crore from equities in September, so far, on rising US bond yields, a stronger dollar and concerns over global economic growth.

The outflow of foreign portfolio money could continue in the coming week or two, Nitasha Shankar, Chief Investment Advisor, YES Securities (India) Ltd, said.

"We also need to keep an eye on the sharp volatility in the rupee, which could impact FPI flows going ahead," he added.

According to the data with the depositories, foreign portfolio investors (FPIs) pulled out a net sum of 4,203 crore from the equities, so far, this month (till September 8).

This came after FPI investment in equities had hit a four-month low of 12,262 crore in August.

Before the latest outflow, FPIs were incessantly buying Indian equities in the last six months -- from March to August -- and brought in 1.74 lakh crore during the period.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, attributed the reversal in trend in September to the rising US bond yields and the uptrend in the dollar index.

Shankar said the main reasons for the outflow can be attributed to a stronger dollar as the Dollar index continued its strong upward momentum and the rising US 10-year treasury bond yields, touching a 15-year high in the week gone by.

"The net outflow was mainly due to uncertainties surrounding the global interest rate landscape, particularly in the United States, and concerns regarding global economic growth," Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, said.

These concerns stem from broader global macroeconomic factors, including surging crude oil prices and the reemergence of inflation risks, he said.

He further said that worries about an impending interest rate hike in the US and its potential impact on the global economy have made investors more cautious, prompting them to adopt a "wait-and-watch" approach.

Apart from equities, FPIs invested 643 crore in the country's debt market during the period under review.

With this, the total investment by FPIs in equity has reached 1.31 lakh crore and close to 28,825 crore in the debt market this year, so far.

In terms of sectors, FPIs have been consistently buying capital goods and power. However, FPI selling in financials is keeping the prices of the banking blue chips low.

Geojit's Vijayakumar said that FPIs can be expected to turn buyers, when the dollar index and US bond yields decline, which, in turn, will depend on the incoming US inflation and growth data.


Foreign portfolio investors (FPIs) have been on a selling spree in the Indian market, exceeding the global financial crisis (GFC) outflow of 2008-09. However, the market benchmark Sensex has not reacted to the FPI selling as it used to in the past. Data from NSDL show that FPIs have sold equities worth 1,41,507 crore in the Indian equities in the financial year 2022 (FY22) so far. Cumulatively, they have withdrawn 1,19,950 crore from the Indian financial market instruments, which includes equities, debt, debt-VRR (voluntary retention route) and hybrid category. The data show, FPIs have sold only equities and bought in debt, debt-VRR and hybrid categories in FY22 so far.
First Published: 10 Sep 2023, 12:28 PM IST