FPIs Withdraw ₹58,711 Crore from Indian Stocks Amid Geopolitical Tensions and Strong Chinese Market


Karnataka News


Foreign investors have recently withdrawn ₹58,711 crore from the Indian market in October, marking a notable shift after a significant investment of ₹57,724 crore in September, the highest in nine months. This outflow reflects growing concerns among investors regarding various geopolitical and economic factors.

The main reasons for this withdrawal include escalating tensions between Israel and Iran, which have raised global uncertainty, alongside a sharp rise in crude oil prices. Additionally, the strong performance of the Chinese market has further influenced foreign investors’ decisions, leading them to pull back from Indian equities.

Since June, Foreign Portfolio Investors (FPIs) have consistently purchased equities after withdrawing ₹34,252 crore during April and May. This shift in investment behavior reflects renewed confidence among foreign investors. Overall, FPIs have been net buyers in 2024, with the only exceptions occurring in January, April, and May, according to data from the depositories.

The recent uptick in equity purchases suggests that investors are optimistic about the Indian market’s potential for growth. This positive trend comes after a period of significant withdrawals, indicating a shift in sentiment as foreign investors reassess their strategies.

Looking ahead, several global factors will play a crucial role in determining the flow of foreign investments into Indian equity markets. Himanshu Srivastava, Associate Director of Manager Research at Morningstar Investment Research India, noted that geopolitical developments and the future direction of interest rates will significantly influence investment trends moving forward.

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FPI Withdrawals Surge Amid Geopolitical Uncertainty and Rising Oil Prices

According to the data, Foreign Portfolio Investors (FPIs) withdrew a net total of ₹58,711 crore from equities between October 1 and October 11.

“Escalating conflicts, particularly in the Middle East between Israel and Iran, have increased market uncertainty, leading to risk aversion among global investors. FPIs have become cautious and pulling out money from emerging markets,” Vinit Bolinjkar, Head of research at Ventura Securities, said.

The ongoing geopolitical crisis has resulted in a significant increase in Brent crude oil prices, rising from $69 per barrel on September 10 to $79 per barrel on October 10. This sharp increase poses inflationary risks and adds to India’s fiscal burden, according to experts.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that Foreign Portfolio Investors (FPIs) appear to be adopting a “Sell India, Buy China” strategy. This shift follows announcements from Chinese authorities regarding monetary and fiscal measures aimed at stimulating the slowing Chinese economy. As a result, FPI investments are moving toward Chinese stocks, which remain relatively inexpensive.

These developments have created a temporary hurdle for Indian equities, as reflected in the outflow of Foreign Portfolio Investors (FPIs) from both the debt and equity segments. Pankaj Singh, smallcase Manager and Founder & Principal Researcher at Smartwealth.ai, expects that these trends will stabilize around the time of the U.S. elections.

In the debt markets, FPIs withdrew ₹1,635 crore through the General Limit while investing ₹952 crore via the Voluntary Retention Route (VRR) during the review period. So far this year, FPIs have invested ₹41,899 crore in equities and ₹1.09 lakh crore in the debt market.

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Netanyahu Pays Tribute to Ratan Tata, Praising Him as a ‘Champion of India-Israel Friendship

Prime Minister Benjamin Netanyahu expressed his condolences on the death of Ratan Tata, an influential Indian business leader, praising his significant contributions to strengthening relations between Israel and India. Netanyahu referred to Tata as a champion of friendship between the two countries, highlighting the importance of his role in fostering collaboration.

Ratan Tata, the former chairman of the Tata Group, passed away on Wednesday evening, October 9, 2024, at the age of 86. His legacy includes not only his business achievements but also his commitment to enhancing ties between India and Israel.

In a post on X directed at Prime Minister Narendra Modi, Mr. Netanyahu emphasized Ratan Tata’s contributions to strengthening the ties between Israel and India.

“To my friend, Prime Minister @narendramodi. I and many in Israel mourn the loss of Ratan Naval Tata, a proud son of India and a champion of the friendship between our two countries,” he said on Saturday (October 12, 2024).

Mr. Netanyahu requested Prime Minister Modi to extend his condolences to Ratan Tata’s family.

“In sympathy, Benjamin Netanyahu,” he said as he concluded the post.

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Global Leaders Honor Ratan Tata for His Impact on International Relations

On Thursday, October 10, 2024, Singapore Prime Minister Lawrence Wong paid tribute to Ratan Tata, describing him as a true friend of Singapore. Wong highlighted Tata’s positive impact on the relationship between Singapore and India, recognizing his efforts in fostering strong ties between the two nations.

The following day, French President Emmanuel Macron expressed his condolences over Tata’s passing on Friday, October 11, 2024. Macron praised Tata for his remarkable contributions to innovation and manufacturing, noting that his work significantly advanced various industries.

Both leaders acknowledged Tata’s profound legacy, emphasizing his role in strengthening international collaboration and promoting economic growth in India and beyond.

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