Foreign portfolio investors (FPIs) have continued to be sellers in Indian markets, with a total outflow of ₹12,911 crore as of May 31, according to National Securities Depository Ltd (NSDL) data. The selling trend began with the onset of the new fiscal year 2024-25 and has been influenced by various factors such as the Lok Sabha elections, global central bank policies, and the outperformance of Chinese markets.
The uncertainty surrounding the Lok Sabha elections 2024, high US bond yields, and the strong performance of Chinese stocks have all contributed to the FPI outflow. Additionally, the high valuations and weak earnings in certain sectors have also led to continued selling by foreign investors.
Market experts believe that the FPI inflows may resume once there is more clarity on global macroeconomic conditions and interest rate outlook. The upcoming election results on June 4 could also have a significant impact on FPI activity in Indian markets.
Despite the current selling trend, analysts remain optimistic about the long-term outlook for FPI flows into Indian debt, especially with India’s inclusion in global bond indices. Factors such as strong economic growth, manageable inflation, and political stability are expected to create a positive outlook for the Indian economy in the future.
Overall, while FPIs have been sellers in Indian markets in recent months, the situation could change dramatically with the resolution of key uncertainties and a more favorable global economic environment. Investors are advised to consult with experts before making any investment decisions, as market conditions can change rapidly.
