India Tops Asia in FPI Outflows With $13.6 Billion Withdrawn Since October

New Delhi: With a net outflow of $13.6 billion since Oct 1, 2024 India is leading among Asian countries with the highest withdrawal of foreign portfolio investments (FPIs).

FPI refers to the acquisition of financial assets, like stocks and bonds, in a foreign country as a strategy for portfolio diversification.

October saw a record outflow of $11.47 billion from the Indian markets, attributed to more favourable conditions in China and inflated domestic valuations in India.

While the trend has continued in November, outflows seem to have slowed down with investors withdrawing Rs 26,533 crore or $3.2 billion from the Indian market this month so far.

According to Bloomberg, FPIs have sold equities in all major Asian countries except Japan. Analysts believe that a strengthening dollar and rising US treasury yields are causing FPIs to pull back from risky markets.

FPIs sold shares worth $5.1 billion in South Korea and $4.3 billion in Taiwan, Bloomberg said. However, they were net buyers of $21.7 billion in Japan in the same period.

With this latest withdrawal, net FPI outflows from India this year have reached Rs 19,940 crore, news agency PTI reported.

Looking ahead, foreign inflows into Indian equities will likely be influenced by various factors, including policies under Donald Trump’s presidency, inflation and interest rate trends, the geopolitical landscape, and the third-quarter earnings of Indian companies, according to Himanshu Srivastava, Associate Director – Manager Research at Morningstar Investment Research India.

Srivastava added that concerns over inflated high valuations of Indian equities are also prompting FPIs to invest elsewhere.

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