October Sets Record as Foreign Portfolio Investors Unload Stocks at Unprecedented Levels
In October 2024, Foreign Portfolio Investors (FPIs) sold stocks worth a record ₹94,017 crore, according to NSDL data. This massive sell-off has driven the Sensex down from its all-time high of 85,978 points, now trading at 79,389 points.
- Foreign Portfolio Investors (FPIs) became net sellers in the Indian stock markets in October 2024, marking a shift in their investment strategy. After months of strong inflows, FPIs offloaded a significant volume of Indian equities, reflecting global economic concerns and shifting market dynamics. This sell-off has raised concerns among domestic investors and analysts, as it contributed to heightened market volatility and a downward trend in key indices. The move by FPIs highlights changing foreign investor sentiment toward emerging markets like India amid global economic uncertainties.
- According to data from the National Securities Depository Limited (NSDL), Foreign Portfolio Investors (FPIs) sold Indian equities valued at ₹94,017 crore in October 2024. This substantial sell-off reflects a cautious approach by foreign investors amid global economic uncertainties and shifting risk appetites. The scale of this divestment has impacted market sentiment, contributing to increased volatility across major indices.
- The Sensex has experienced a significant decline, dropping from its all-time high of 85,978 points to its current level of 79,389 points. This downturn reflects heightened market volatility, influenced by large-scale selling from Foreign Portfolio Investors (FPIs) and broader economic uncertainties. The index’s retreat signals a cautious shift in investor sentiment as global and domestic factors continue to shape the market’s trajectory.
In October 2024, Foreign Portfolio Investors (FPIs) shifted to a net selling position in Indian stock markets, marking a notable departure after four consecutive months of net buying. This reversal has been a key factor in the near 8% decline from the market peak, with benchmark indices feeling the impact. Data from the National Securities Depository Limited (NSDL) reveals that FPIs offloaded stocks worth ₹94,017 crore in October alone.
In the preceding months of June, July, August, and September, FPIs had maintained a positive stance, purchasing Indian stocks worth ₹26,565 crore, ₹32,365 crore, ₹7,320 crore, and ₹57,724 crore, respectively. This period of sustained buying significantly fueled the market’s bullish momentum, contributing to record highs in Indian indices.
The Sensex, India’s key benchmark index, has since fallen from its all-time high of 85,978 points to 79,389 points, a substantial decline influenced by the shift in FPI activity, coupled with lower-than-expected Q2 earnings results from Indian corporations. The recent trading sessions have reflected this bearish sentiment, driven by outflows and disappointing financial performance across various sectors.
As of the latest data, on Thursday, the Sensex closed at 79,389.06 points, down by 553.12 points (0.69%), while the Nifty ended at 24,205.35 points, declining by 135.50 points (0.56%). This FPI withdrawal trend underscores the market’s vulnerability to foreign fund movements, especially amid uncertain earnings forecasts and broader economic factors influencing investor sentiment.
Foreign Portfolio Investment (FPI) itself is defined as investment by foreign investors in financial assets of another country. These investments play a pivotal role in shaping the market dynamics, often leading to volatility when significant inflows or outflows occur. In recent months, FPI movements have been a decisive force in both propelling the market to new highs and triggering the current downturn.
Vinod Nair, Head of Research at Geojit Financial Services, recently commented on the outlook for the Indian stock market, indicating that the current phase of consolidation is expected to persist in the short term. A potential trend reversal, he noted, would hinge on two main factors: a slowdown in Foreign Institutional Investors’ (FIIs) selling activity and the outcome of the upcoming U.S. presidential election.
Interestingly, while foreign investors have been net sellers in Indian equities, domestic institutional investors (DIIs) have taken a contrasting approach, remaining net buyers. According to recent data, DIIs purchased stocks worth several thousand crores more than FPIs in October, partially offsetting the impact of foreign outflows. This steady buying by domestic investors has likely cushioned the market, preventing a more pronounced drop in the indices.
To understand the recent FPI selloff and its impact on Indian stock indices, and how domestic investors are responding, read the full analysis here.
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