Foreign Investors Flee: Rs 30,000 Crore Yanked from India in Just Two Weeks

FPI Withdrawal From India: In a startling turn of events, foreign investors have pulled out a staggering Rs 30,000 crore from India within a mere two-week span. 

Last week was the 14th consecutive week of FPI withdrawals. Due to many global and domestic factors, FPIs have been selling continuously for a long time.

FPIs are being cautious
Himanshu Srivastava, Associate Director-Manager Research, Morningstar Investment, said, "The uncertainty about US trade policies under President Donald Trump has affected risk-taking ability globally. In such a situation, FPIs are adopting a cautious approach towards emerging markets like India."

The strength of the dollar is also a reason
Other major factors driving FPI outflows are the surge in US bond yields and the strengthening of the dollar. This has made US assets more attractive. Also, the fall in the Indian rupee has further aggravated this trend as it reduces returns for foreign investors.

Investing in China
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that FPIs are withdrawing money from India and investing in Chinese stocks. The performance of Chinese stock markets is better than other markets.

He said, "The recent fall in the dollar index will limit the flow of funds into the US. However, due to the uncertainty created by the trade war between the US and other countries, more investments are likely to go into safe asset classes like gold and dollar."

How much was the investment in the past years
According to the data, FPIs have invested Rs 7,355 crore under the normal limit in bonds during the period under review and withdrew Rs 325 crore through the voluntary retention route.

FPI's investment in the Indian market in 2024 was significantly reduced to Rs 427 crore. Earlier in 2023, they had invested Rs 1.71 lakh crore in the Indian market, while in 2022 they withdrew Rs 1.21 lakh crore amid aggressive increase in interest rates by global central banks