FPI Selling Hits ₹1.2 Lakh Crore in 2024, Second-Highest in a Decade
Foreign Portfolio Investors (FPIs) pulled out ₹1.2 lakh crore from Indian equities in 2024, making it the second-worst year for outflows in the last decade. The massive sell-off reflects global economic concerns, rising interest rates, and weakening investor sentiment in emerging markets like India.
Key Drivers Behind the Outflows
Several factors contributed to the significant outflow of foreign capital:
- Global Interest Rate Hikes: Central banks worldwide, including the US Federal Reserve, raised interest rates aggressively to combat inflation. This led to increased yields in developed markets, attracting capital away from emerging economies.
- Geopolitical Tensions: Escalating global conflicts and economic uncertainty further dampened investor confidence.
- Rupee Depreciation: A weaker Indian rupee against the US dollar also impacted foreign investments as currency risks heightened.
Sectoral Impact of FPI Outflows
The outflows were concentrated in high-valuation sectors such as IT and banking. FPIs have shifted their focus to markets offering better risk-adjusted returns, impacting liquidity and stock valuations in India.
2024 in Context: Comparing Historical Trends
While the ₹1.2 lakh crore withdrawal in 2024 is significant, it stands second to the ₹1.4 lakh crore sell-off during the pandemic-hit year of 2020. The outflows have raised concerns about India’s ability to sustain foreign investments in a volatile global environment.
Looking Ahead: Challenges and Opportunities
Despite the outflows, experts remain cautiously optimistic about India’s long-term growth potential. They highlight opportunities in sectors like green energy, manufacturing, and technology as potential areas to attract
