Going forward, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, believes that reversal of FPI strategy will happen when the dollar index moves down.
According to the data, Foreign Portfolio Investors (FPIs) offloaded shares worth Rs 21,272 crore from Indian equities so far this month (till February 14).
Market concerns heightened as US President Donald Trump imposed new tariffs on steel and aluminum imports and announced plans for reciprocal tariffs on several countries, Himanshu Srivastava, Associate Director-Manager Research, Morningstar Investment Research India, said.
These developments reignited fears of a potential global trade war, prompting FPIs to re-evaluate their exposure to emerging markets, including India, he added.
Also, Vipul Bhowar, Senior Director – Listed Investments, Waterfield Advisors, said, “shifts in global policies, especially those emerging from the US, are invoking a sense of uncertainty among FPIs, which in turn is reshaping their investment strategies in dynamic markets like India”. On the domestic front, lackluster corporate earnings and persistent depreciation of the Indian rupee, which breached multi-year lows, further diminished the appeal of Indian assets, Srivastava said. On the other hand, FPIs were buyers in the debt market during the period. They put in Rs 1,296 crore into debt general limit and Rs 206 crore in debt voluntary retention route.
The overall trend indicates a cautious approach by foreign investors, who scaled back investments in Indian equities significantly in 2024, with net inflows of just Rs 427 crore.
This contrasts sharply with the extraordinary Rs 1.71 lakh crore net inflows in 2023, driven by optimism over India’s strong economic fundamentals. In comparison, 2022 saw a net outflow of Rs 1.21 lakh crore amid aggressive rate hikes by global central banks.
