The Indian stock market has witnessed significant fluctuations in Foreign Portfolio Investors' (FPIs) trading activities over the past decade. FPIs play a crucial role in shaping market sentiment, and their sustained selling phases often trigger volatility.
Belows Information shows FPI outflows lasting three or more consecutive months over the past ten years. The latest data (October 2024 to present) shows a staggering ₹2,81,448.74 crore in FPI selling, leading to a 15.01% drop in Nifty—the highest in this list.
Historical Trends in FPI Selling
The data reveals multiple instances where FPIs have aggressively pulled out from Indian equities:
1. Feb 2020 – April 2020 (COVID-19 Shock)
Duration: 3 months
FPI Selling: ₹72,177.98 crore
Nifty Performance: -14.92%
The COVID-19 pandemic led to panic selling as global markets crashed.
2. Oct 2021 – June 2022 (Global Economic Uncertainty)
Duration: 9 months
FPI Selling: ₹3,03,134.45 crore
Nifty Performance: -10.60%
Factors: Rising US interest rates, inflation, and geopolitical tensions.
3. Dec 2022 – Feb 2023 (Tightening Monetary Policies)
Duration: 3 months
FPI Selling: ₹41,972.46 crore
Nifty Performance: -7.96%
Reasons: Global economic slowdown and persistent inflation.
4. Current Phase: Oct 2024 – Ongoing (Record Outflows)
Duration: 5+ months (still ongoing)
FPI Selling: ₹3,23,763 crore
Nifty Performance: -15.01%
This phase marks one of the largest and longest FPI selling streaks ever recorded.
What’s Driving This Massive Sell-off?
Several factors could be contributing to this prolonged FPI outflow:
Global Economic Slowdown: Uncertain macroeconomic conditions have led investors to withdraw funds from emerging markets.
Geopolitical Risks: Global tensions and policy uncertainties have increased risk aversion.
India-Specific Concerns: Factors such as corporate earnings, domestic inflation, and policy shifts may also be influencing investor sentiment.
Market Outlook: What’s Next?
Historically, prolonged FPI selling phases have eventually given way to rebounds, as seen in previous instances. The key factors to watch for a potential market turnaround include:
US Federal Reserve’s monetary policy stance
Domestic economic growth and corporate earnings revival
Geopolitical stability
Inflation and commodity price trends
Long-term investors should remain cautious but not panic, as Indian markets have always recovered from such phases in the past.
Disclaimer
The information in this article is based on publicly available data and is for informational purposes only. It does not constitute financial advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions.