Foreign investors again did heavy selling in the stock market, sold shares worth so many hundred crores

Last week, the stock market witnessed the biggest sell-off since 2022. Foreign investors were the reason for such a big fall in the market. In fact, after being buyers for two consecutive weeks, foreign portfolio investors (FPIs) have withdrawn Rs 976 crore from the Indian stock markets last week. The strong US dollar and rising yields on 10-year bonds in the US affected investor sentiment. According to data from the National Securities Depository Ltd., foreign portfolio investors started the week with a positive attitude. During the first two trading sessions (December 16-20), they invested Rs 3,126 crore in stocks. However, later their attitude changed and they withdrew more than Rs 4,102 crore in three sessions. Thus, during the week they made a net withdrawal of Rs 976 crore. However, despite this, the FPI attitude remained positive in December and they have invested Rs 21,789 crore in the Indian stock market during the month. 

Due to this, uncertainty increased in the market 

Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, said that FPIs are adopting a cautious stance amid uncertainty over the results of the US central bank Federal Reserve’s meeting and future policy review. He said that the Federal Reserve has cut the interest rate by 0.25 percent for the third time this year, but it has indicated less rate cuts in the future, which affected investor sentiment and started selling in the global market. He said that apart from this, high valuations, weak September quarter results of companies, weak December results expected, slow pace of gross domestic product (GDP) growth and fall in rupee have weakened the confidence of foreign investors. 

Because of this FPIs are selling 

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that FPIs are selling due to the strength in the dollar index and rising yields on 10-year bonds. He said that issues related to India such as concerns over growth and the second quarter results of companies not being as expected have also affected the sentiment of FPIs. Earlier, FPIs had made huge withdrawals of Rs 21,612 crore in November and Rs 94,017 crore in October. Interestingly, in September, FPIs had made a net investment of Rs 57,724 crore in the Indian stock markets, which is a nine-month high. Depository data shows that so far in 2024, FPIs have invested Rs 6,770 crore in the Indian stock markets.