FPIs pull out Rs 9,800 cr in Oct

New Delhi: Foreign investors have pulled out nearly Rs9,800 crore from Indian equities this month so far owing to a sustained rise in US bond yields and the uncertain environment resulting from the Israel-Hamas conflict.

This came after Foreign Portfolio Investors (FPIs) turned net sellers in September and pulled out Rs14,767 crore. Before the outflow, FPIs were incessantly buying Indian equities in the last six months from March to August and brought in Rs1.74 lakh crore during the period. This inflow was largely due to the reduction in US inflation from 6 per cent in February to 3.2 per cent in July. The temporary pause in the US Federal rate hike from May to August also played a role, Kislay Upadhyay, smallcase manager and Founder of FidelFolio Investments, said. Going ahead, the trajectory of FPIs’ investments in India will be influenced not only by global inflation and interest rate dynamics but also by the developments and intensity of the Israel-Hamas conflict, Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Adviser India, said.

Geopolitical tensions tend to elevate risk, which typically hurts foreign capital inflows into emerging markets like India, he added. According to the data with the depositories, Foreign Portfolio Investors (FPIs) sold shares to the tune of Rs 9,784 crore this month (till October 13). The recent flow trend points towards FPIs adopting a cautious stance towards investing in emerging markets like India. The sustained rise in US bond yields was the principal factor driving the FPI selling, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Additionally, the prevailing uncertain environment resulting from the Israel-Hamas conflict, which has generated heightened geopolitical tension in the Middle East region also played a main factor in FPIs selling, Morningstar’s Srivastava said. This development has sparked concerns about potential disruptions in oil-related activities.