The Trump Trade initiated the gradual withdrawal of money by foreign investors from emerging markets, including India. Since the end of September 2024, foreign portfolio investors have seen their India assets under custody fall from $931.1 billion to $748.1 billion as of Feb. 15, 2025, an erosion of $183 billion in value.
The Trump Trade initiated the gradual withdrawal of money by foreign investors from emerging markets, including India. Since the end of September 2024, foreign portfolio investors have seen their India assets under custody fall from $931.1 billion to $748.1 billion as of Feb. 15, 2025, an erosion of $183 billion in value.
In rupee terms, the value of FPIs has fallen from Rs 77.96 lakh crore to Rs 64.77 lakh crore during the same period, eroding Rs 13.18 lakh crore.
In short, for every Rs 100 decline in their assets under custody, the FPIs were able to repatriate only Rs 18.4, with the remaining amount lost in price erosion.
The fall in asset value on a rupee basis is around 16%, while in dollar terms it is 19%. The 3% difference is accounted for by rupee depreciation against the dollar and other currencies. Nearly 42% of the assets under management owned by the FPIs are domiciled in US markets, followed by Singapore, Luxembourg, Ireland, and Mauritius. Together, these five countries account for 68% of the total assets held by foreign investors.
FPIs have been withdrawing money from emerging markets and redeploying it in the US market for better returns.
The change in FPI asset value is a function of three components: net inflows/outflows that take place every trading day, the fall in asset prices, and the depreciation of the rupee against the dollar.
The dollar itself has gained nearly 3.4% since the end of September. A rise in the dollar against the rupee reduces the quantum of FPI returns when they sell and repatriate the amount back to their home country.
To be clear, the benchmark Nifty 50 corrected by 11.68%, and the broader market index, Nifty 500, corrected by 15.28% during the same period. In comparison, the FPIs have lost 19.6% in value during this period.
FPIs have also seen significant outflows since Sept. 30. In the secondary market, they net-sold Rs 2.93 lakh crore, while including primary market participation, this amount comes to a net sell of Rs 2.06 lakh crore. In dollar terms, they have suffered a value erosion of $159.12 billion since Sept. 30.
FPIs have nearly 30% exposure to the financial services sector. The AUC for this sector declined by 18%. This was followed by the oil and gas sector, where the AUC declined by 13.6%. The automobiles and auto components sector saw asset value deplete by 10.9%, followed by the FMCG, power, and capital goods sectors.
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