Foreign portfolio investors (FPIs) resumed selling from the Indian stock market in November. They have withdrawn ₹3,765 crore so far this month, a significant change from the strong inflows in October. According to market experts, uncertainty over US Fed Reserve interest rates and global risks have dented investor confidence. FPIs invested ₹14,610 crore in October. FPIs invested ₹14,610 crore in Indian equities in October, breaking a three-month selling streak from July to September. During that period, ₹17,700 crore was withdrawn in July, ₹34,990 crore in August, and ₹23,885 crore in September. Overall, foreign investors have withdrawn over ₹1.43 lakh crore from the stock market so far this year. The situation in the debt market is slightly better, with investments worth ₹8,114 crore under the general limit, but ₹5,053 crore withdrawn through the voluntary retention route. Global and domestic factors hindered investment, leading to risk aversion. Global factors are the biggest drivers of selling by foreign investors. Uncertainty over the direction of the US Federal Reserve’s interest rate cut, a strong dollar, weak risk appetite in emerging markets, geopolitical tensions, and volatile crude oil prices have made investors cautious. Domestically, high valuations in some sectors and sluggish performance of industrial indicators are also weakening confidence, although macroeconomic conditions remain stable. Himanshu Srivastava, Principal Manager Research at Morningstar Investment Research India, said that global uncertainties have reinforced the risk-off tone. Valuations remain high in some sectors in the domestic market and industry data appears weak, impacting investor confidence. IT, consumer services, and healthcare sectors are the worst affected. The selling has hit IT services, consumer services, and healthcare sectors the most. Global risk aversion and tech stock volatility targeted these sectors. Waqar Javed Khan, Senior Fundamental Analyst at Angel One, said that global risk aversion and tech volatility hit these sectors the most. The Fed’s rate cut signals in December and the progress of the India-US trade pact will be closely watched. However, there are no clear signs of a trend reversal. FPIs have been buyers on some days and sellers on others. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said that there is no clear trend change in FPI flows. There have been buying on some days and selling on others. However, sentiment has improved after the Nifty and Sensex broke record highs on November 27, driven by better earnings in Q2 and growth expectations in Q3-Q4. Expectations rest on Fed and trade deal in December Looking ahead, FPI activity in December will largely depend on the rate cut signals from the US Fed Reserve and the progress of the India-US trade agreement. If these are positive, the market may bounce back, otherwise the selling trend may continue. The recent rally in the market has provided some relief, but investors are advised to remain cautious. On Friday, FIIs sold shares worth ₹3,672.27 crore. The stock market declined on Friday, November 28, the last trading day of the week. The Sensex fell 14 points to close at 85,707. The Nifty also declined by 13 points and closed at 26,203. On November 28, foreign investors (FIIs) sold shares worth ₹3,672.27 crore in the cash segment. Whereas domestic investors (DIIs) bought shares worth ₹3,993.71 crore.
