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Foreign investors pulled out ₹21,612 crore ($2.56 billion) from the Indian equity market in November, mainly owing to the rising U.S. bond yields, strengthening dollar and expectation of a slowdown in the domestic economy.

While the sell-off continues, the quantum of net outflow significantly reduced compared to October, when FPIs recorded a massive withdrawal of ₹94,017 crore ($11.2 billion). With the latest pull out, Foreign Portfolio Investors (FPIs) have experienced total net outflow of ₹15,019 crore in 2024 so far.

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“Looking ahead, the flow of foreign investments into Indian equity markets will hinge on several key factors. These include the policies implemented under Donald Trump’s Presidency, the prevailing inflation and interest rate environment, and the evolving geopolitical landscape,” Himanshu Srivastava, Associate Director Manager Research, Morningstar Investment Research India, said.

“Additionally, the third-quarter earnings performance of Indian companies and the country’s progress on the economic growth front will play a crucial role in shaping investor sentiment and influencing foreign inflows,” he added.

According to the data, FPIs recorded a net outflow of ₹21,612 crore in November. This came following a net withdrawal of ₹94,017 crore in October, which was the worst monthly outflow.

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However, in September, foreign investors made a nine-month high investment of ₹57,724 crore. Market analysts attributed the latest outflow to the rising U.S. bond yields, strengthening dollar and expectation of a slowdown in the domestic economy.

Overall, November experienced net outflow but FPIs staged a notable reversal at the beginning of the week ended November 29, due to decisive victory of the BJP-led Mahayuti alliance in the Maharashtra Assembly elections. “The resulting political stability appears to have strengthened investor confidence,” Mr. Srivastava said.

Another factor that contributed to this buying activity is the rebalancing of MSCI’s key indices, which added few select Indian stocks in its index. “Further, a glimmer of hope for ceasefire between Israel and Lebanon may have also positively influenced market sentiment, particularly from a geopolitical standpoint,” he added.

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“A perplexing feature of the recent FPI activity is their highly erratic nature. For instance, during November 23-25, FPIs were buyers, however, in the next two days they again turned massive sellers having sold equity worth ₹16,139 crore,” V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

On the other hand, FPIs invested ₹1,217 crore in the debt general limit and ₹3,034 crore in the debt Voluntary Retention Route (VRR) during the period under review. So far this year, FPIs have invested ₹1.07 lakh crore in the debt market.