Foreign Investors Pull Rs 23,885 Crore From Indian Equities In September

September again saw Foreign portfolio investors as net sellers of Indian equities, withdrawing Rs 23,885 crore and taking year-to-date outflow to Rs 1.58 lakh crore as per PTI.

This marks the third consecutive month of withdrawals, following heavy outflows of Rs 34,990 crore in August and Rs 17,700 crore in July, data from depositories showed.

This recent sell-off has been triggered by a combination of factors, including unexpected US trade and policy movies such as steep tariff hikes, upto 50% on Indianexports and a one-time $100,000 fee for H-1B visa applications.

These developments have dampened investor sentiment, particularly in export-driven sectors like IT, according to Himanshu Srivastava, Principal Analyst at Morningstar Investment Research India, PTI said.

Additionally, The Indian rupee plunged to a fresh lifetime low of Rs 88.80 per US dollar on Monday, Sept. 30, marking a deepening of pressure on the currency amid global and domestic headwinds.

However, the Reserve Bank of India on Wednesday announced a slew of measures to promote the internationalisation of the rupee. These include allowing foreigners to invest money stored in rupee vostro accounts in corporate bonds.

Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, noted that valuations have now become more reasonable and that factors, such as a cut in GST rates and a pro-growth monetary policy, could help rekindle foreign interest, PTI reported. 

"India remains the fastest-growing major economy globally," Khan said, adding that the upcoming earnings season and macroeconomic data will play a key role in determining FPI flows in the near term.

Building on this view, Himanshu Srivastava noted that a sustained rebound in foreign portfolio investment will depend on several key factors: clarity on trade tariffs, stabilisation of the rupee, improved corporate earnings visibility, and a globally supportive interest rate environment. If these conditions align, India's strong structural growth narrative could once again attract foreign investors, albeit selectively.

(With inputs from PTI)