NEW DELHI: Foreign investors pulled out Rs 22,194 crore from Indian equities until January 10 this month, majorly due to anticipated weak earnings, strengthening US dollar, and worries about tariff policies during Donald Trump's tenure. This follows a previous investment of Rs 15,446 crore in December, as per depository data.
"This exodus of foreign money from the Indian markets could be attributed to multitude of factors, such as expectation of yet another weak earning season, concerns over the tariff war under Trump's presidency, slowdown in GDP growth, still high inflation numbers and uncertainty over the commencement of the interest cut in India," Himanshu Srivastava, associate director, manager research, Morningstar Investment Research India, said.
Additionally, the rupee's weak performance, increased US bond yields, and high Indian market valuations have contributed to making Indian equities less appealing to international investors.
"The single major reason for the relentless selling by the FPIs is the steady rise in the dollar index which is above 109 now. The surge in the 10-year bond yield to above 4.6 per cent is ensuring capital flows from emerging markets like India," V K Vijayakumar, chief investment strategist, Geojit Financial Services, said.
Current patterns suggest foreign investors are exercising caution, having significantly reduced their investments in Indian equities in 2024, with net inflows of only Rs 427 crore.
This stands in stark difference to 2023's substantial net inflows of Rs 1.71 lakh crore, which were driven by confidence in India's robust economic foundations.
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