₹1.5 lakh crore offloaded since Oct! Will FIIs return to Indian stock market anytime soon? Experts weigh in
Indian Stock Market: Foreign institutional investors (FIIs) continue to remain net sellers in the Indian stock markets for the second consecutive month, with November following a pattern similar to that of October. This shift comes after a period of sustained net buying, which lasted for four months from June to September.
The recent decline in FII investments reflects changing market dynamics and investor sentiment, which are influenced by various global and domestic factors, as per experts.
“After selling equity for ₹113,858 crores through exchanges in October, FIIs have sold another ₹41,872 crores of equity through exchanges in November through 22nd. The total FII selling through the exchanges for the period 1st October through 23rd November stands at a whopping ₹1,55,730 crores.
“After selling equity for ₹113,858 crores through exchanges in October, FIIs have sold another ₹41,872 crores of equity through exchanges in November through 22nd. The total FII selling through the exchanges for the period 1st October through 23rd November stands at a whopping ₹1,55,730 crores.
This is the kind of selling that happens in a year when FIIs are on selling mode,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
3 factors behind massive FII selling
1. Weak Q2 Earnings
The ongoing selling pressure from FIIs can largely be attributed to high valuations, as India has been one of the more expensive markets within the Emerging Markets (EM) group, according to experts.
Further, analysts express concerns about earnings growth for FY25, especially after the disappointing results reported in Q2.
2. Sell India, Buy China
Market experts noted that Chinese stimulus measures and cheaper valuations compared to India have also contributed to the recent selloff back home.
“The China factor also played a role in the recent selloff on Indian equities as FIIs chose to shift some funds to the Chinese market, assuming better short-term yields in comparison to India as valuations have become cheap,” explained, Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities.
3. Trump Trade
According to experts, another factor that played out is the Trump trade. President-elect Donald Trump has promised to cut the corporate tax from the current 21% to 15%, which is expected to boost corporate earnings in the US, attracting more capital flows to its market. Further, Trump’s proposed tariffs on imports will make manufacturing more competitive in the US. These factors can strengthen the dollar against other currencies, said experts, which is negative from the perspective of emerging markets like India.
3 factors behind massive FII selling
1. Weak Q2 Earnings
The ongoing selling pressure from FIIs can largely be attributed to high valuations, as India has been one of the more expensive markets within the Emerging Markets (EM) group, according to experts.
Further, analysts express concerns about earnings growth for FY25, especially after the disappointing results reported in Q2.
2. Sell India, Buy China
Market experts noted that Chinese stimulus measures and cheaper valuations compared to India have also contributed to the recent selloff back home.
“The China factor also played a role in the recent selloff on Indian equities as FIIs chose to shift some funds to the Chinese market, assuming better short-term yields in comparison to India as valuations have become cheap,” explained, Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities.
3. Trump Trade
According to experts, another factor that played out is the Trump trade. President-elect Donald Trump has promised to cut the corporate tax from the current 21% to 15%, which is expected to boost corporate earnings in the US, attracting more capital flows to its market. Further, Trump’s proposed tariffs on imports will make manufacturing more competitive in the US. These factors can strengthen the dollar against other currencies, said experts, which is negative from the perspective of emerging markets like India.
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