Has Indian Stock Market Lost Its Luster? Record Rs 94,000 Crore FPI Outflow In October – Check Monthly Data

Indian Stock Market Under Pressure As FPI Withdrawals Total Rs 94,000 Crore In October (Image Source: iStock)

New Delhi: Despite the festive season, October turned out to be a tough month for India’s equity markets, with foreign portfolio investors (FPIs) selling an unprecedented Rs 94,000 crore ($11.2 billion) worth of Indian stocks. This marked the largest-ever monthly outflow of FPIs in Indian market history, surpassing the previous high of Rs 61,973 crore recorded in March 2020 at the onset of the COVID-19 pandemic. Key reasons behind this massive selloff include high valuations of Indian markets and a growing preference among foreign investors to diversify their portfolios, with other markets like China presenting more attractive prospects. China’s recent economic stimulus measures have also made its stocks appealing, further drawing foreign capital away from India.

FPIs Buy/Sell Monthly Data

October’s outflows came in stark contrast to the substantial FPI buying seen in September 2024, which amounted to Rs 57,724 crore – a nine-month high that had previously boosted investor confidence. Until October, FPIs had largely remained net buyers throughout 2024, apart from a brief period of withdrawals in April and May that totaled Rs 34,252 crore. However, the consistent selloff in October, during which FPIs were net sellers almost every day, wiped out much of the gains made earlier in the year, bringing net foreign investment in Indian equities down to Rs 6,593 crore for the year.

Impact Of Foreign Investors Sell-Off

This selloff has taken a toll on the Indian stock market, contributing to an 8 per cent decline in benchmark indices from their recent peaks. Analysts point to the high valuations of Indian stocks, which some foreign investors now view as overvalued compared to the more competitively priced Chinese stocks. Additionally, China’s recent stimulus measures have made its markets more attractive, amplifying capital outflows from India.

What About Debt Market?

In the debt market, FPIs also pulled out Rs 4,406 crore from the general debt category, though they invested Rs 100 crore through the Voluntary Retention Route (VRR). Altogether, foreign investment in the debt market has reached Rs 1.06 lakh crore so far this year.