FPI Sell-off Hits Indian Stocks: Second Worst Year in Decade

Foreign portfolio investors (FPIs) sold Indian stocks worth Rs 1,20,598 crore in 2024. This made it the second-worst year in a decade for FPI outflows. Factors like high stock valuations, weak GDP growth, and attractive US bond yields drove this selling.

High-valuation sectors such as IT and finance faced most of the selling. Despite this, domestic investors kept the market stable by investing heavily. Their investments softened the impact of FPI outflows.

FPIs sold due to concerns over India’s economic recovery. Weak GDP growth figures throughout the year worried them. The strong US dollar and rising US bond yields also attracted capital away from India. US bonds offered attractive returns, making them more appealing than Indian stocks.

Despite these challenges, domestic investors, including retail and institutional ones, showed confidence in the Indian market. Their continuous investments provided stability and cushioned the market from sharp declines.