FPI Outflows August: $4 Billion Surge
- foreign Portfolio investors (FPIs) significantly reduced their holdings in Indian equities during August,marking the largest net equity sales in seven months.
- Data from the National Securities Depository Limited (NSDL) reveals the following:
- FPIs were net sellers in 15 out of 19 trading sessions in August.
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Foreign Portfolio Investors Exit Indian Equities at Seven-month High
Overview
foreign Portfolio investors (FPIs) significantly reduced their holdings in Indian equities during August,marking the largest net equity sales in seven months. Cumulative exits this year have reached levels not seen sence 2022, driven by factors including US tariffs on Indian exports and a weakening
rupee.
Illustration of Foreign Portfolio Investor outflows from India. (Source: Agencies)
Key Statistics
Data from the National Securities Depository Limited (NSDL) reveals the following:
| Metric | Value (USD Billions) | Value (INR Crore) |
|---|---|---|
| August 2024 Net Equity Sales | $3.99 | ₹34,993 |
| year-to-Date (Jan-Aug) Cumulative Sales | $14.9 | ₹1.3 lakh |
| 2022 Year-to-Date (Jan-Aug) Cumulative sales | $21.4 | N/A |
| Primary Market purchases (Offsetting Outflows) | $4.7 | N/A |
FPIs were net sellers in 15 out of 19 trading sessions in August. The year-to-date outflows are the highest as the first eight months of 2022.
Driving Factors
Several factors contributed to the recent FPI outflows:
- US tariffs: Punitive tariffs imposed by the United States on Indian merchandise exports negatively impacted the outlook for Indian businesses.
- Rupee Decline: The depreciation of the Indian rupee against the US dollar reduced the returns for foreign investors when converting profits back to their home currencies.
-
Global Economic Uncertainty: Broader concerns about global economic growth and rising interest rates likely prompted some investors to reduce their exposure to emerging markets like India.
Offsetting Factors & Local Support
While FPI outflows have been considerable, they have been partially mitigated by inflows into the Indian primary market. Overseas investors purchased $4.7 billion