FPI Outflows Exceed ₹52,000 Crore in October Amid Nifty Resilience
Foreign Portfolio Investors have withdrawn over ₹52,000 crore from Indian equities this month, yet the Nifty index shows unexpected strength.
FPI net selling reached ₹52,100 crore from October 12 to 16.
The Nifty index rose 2.8% despite significant foreign outflows.
Rising US bond yields and crude oil prices are pressuring foreign investments.
In a notable trend, Foreign Portfolio Investors (FPIs) have sold shares worth over ₹52,000 crore in October, with net outflows recorded at ₹7,934 crore from October 12 to 16 alone. This figure surpasses the ₹35,861 crore withdrawn in September, indicating a continued trend of foreign selling with two weeks still remaining in the month. The cumulative outflows for the year have now exceeded ₹3 lakh crore, reflecting ongoing challenges in the Indian market due to external economic pressures.
The backdrop to this selling spree includes rising global bond yields and fluctuating crude oil prices, which have created a challenging environment for emerging markets like India. The US 10-year Treasury yield has recently surged to around 5.3%, following inflation data that exceeded expectations. This increase in yields makes US dollar-denominated assets more attractive, prompting investors to reassess their portfolios and reduce exposure to equities in emerging markets.
Provisional exchange data indicates that FPIs sold shares worth ₹8,990 crore during the past week, with significant daily withdrawals. On Thursday alone, foreign investors sold shares worth ₹5,285 crore, marking a continuation of a 15-session selling streak that began on September 24. However, a slight recovery was noted on Friday with purchases amounting to ₹1,166 crore, breaking the selling trend. Despite this, the overall sentiment remains cautious as net selling persisted throughout the week.
The impact of these foreign outflows is being somewhat mitigated by domestic institutional investors, who have stepped in to absorb some of the selling pressure. This support has helped the Nifty index gain 2.8% during the week, closing at 23,146, while the Sensex rose by 3.1%. The technology sector, in particular, has shown resilience, with the Nifty IT index climbing 11.7% amid positive sentiment surrounding artificial intelligence and quarterly earnings from major IT firms.
Looking ahead, the market will be closely monitoring the upcoming Federal Reserve meeting, where expectations of another interest rate hike have increased following recent inflation data. Additionally, the effects of rising crude oil prices on inflation and corporate profitability in India will be critical factors to watch. As the Reserve Bank of India continues to implement measures to stabilize the rupee, the interplay between domestic and foreign investment dynamics will remain a focal point for market participants.
