Foreign Investors Slow Down Selling in Indian Market Amid Global Uncertainty
In the second week of November, foreign portfolio investors (FPIs) reduced their selling pace in the Indian equity market. Data from the National Securities Depository Limited (NSDL) shows that between November 11 and November 14, FPIs recorded net sales of Rs 2,426 crore, a significant drop from Rs 19,994 crore in the first week of November.
Despite this slowdown, the overall trend remains negative, with FPIs pulling out Rs 22,420 crore from Indian equities in November. This marks a continued streak of net outflows, reflecting cautious sentiment among global investors due to uncertain market conditions. The sustained selling pressure has turned FPIs’ net investment in equities negative for 2024, with net selling at Rs 15,827 crore.
The outflows occur amid a challenging global economic environment characterized by geopolitical tensions, inflationary pressures, and central bank actions, leading investors to be more risk-averse. Analysts suggest that foreign investors are reallocating their portfolios towards safer assets or other emerging markets, affecting India’s equity market dynamics.
Ajay Bagga, a banking and market expert, noted that the selling intensity by FPIs is reducing. He mentioned that after the Trump victory, there is a rerating of China downwards, and India could benefit from a China+1 strategy. Major global flows are moving to US and Japan equity markets, while emerging markets are seeing outflows. Bagga anticipates a potential reversal in emerging market flows due to expected Trump administration economic policies and a preference for a weaker US dollar.
Market participants will closely monitor FPI flow trends in the coming weeks, as they remain crucial for domestic market performance.
Doubts Revealed
Foreign Investors -: Foreign investors are people or companies from other countries who invest money in India. They buy shares or stocks in Indian companies to earn profits.
FPIs -: FPIs stands for Foreign Portfolio Investors. These are investors from other countries who invest in financial assets like stocks and bonds in India.
Net sales -: Net sales refer to the total amount of money that foreign investors have sold in the market after subtracting the amount they have bought. It shows whether they are taking more money out or putting more money in.
Rs 2,426 crore -: Rs 2,426 crore is a large amount of money, specifically 2,426 crore rupees. A crore is a unit in the Indian numbering system equal to ten million.
Geopolitical tensions -: Geopolitical tensions are conflicts or disagreements between countries that can affect global peace and economic stability. These tensions can make investors cautious.
Inflation -: Inflation is when the prices of goods and services increase over time, reducing the purchasing power of money. It means you need more money to buy the same things.
Ajay Bagga -: Ajay Bagga is a market expert who understands and analyzes financial markets. He shares insights on how global events can impact the Indian market.
China+1 strategy -: The China+1 strategy is when companies look to invest in countries other than China to reduce their dependence on China for manufacturing and business. This can benefit countries like India.
Post-Trump victory -: Post-Trump victory refers to the time after Donald Trump won the US presidential election. His policies can influence global trade and investment patterns.