Despite pull out, FIIs still have over Rs 73 lakh crore invested in Indian markets: Expert
Oct 29, 2024
Mumbai (Maharashtra) [India], October 29 : The continuous selling by foreign investors in October has led the market to fall by 6.5 per cent this month. But this fall does not feature in the top 10 falls of Nifty since its inception in the mid-1990s.
However, the FII outflows are at the highest ever in absolute number. So far a record of over Rs 1,05,000 crore has been withdrawn by FIIs this month.
But despite the significant outflow, the Nifty 50 index--the benchmark for India's equity market--has dropped by only about 6.5 per cent during October.
It is also to be noted that the Rs 105,000 crore withdrawn by FIIs represents only about 1 per cent of their total investment in the Indian markets.
According to recent data, FIIs account for roughly 16 per cent of the NSE's market capitalization, of approximately Rs 470 lakh crore at the end of September. Even after October's selling, FIIs still have over Rs 73 lakh crore invested in the Indian markets.
Ajay Bagga, a Banking and Market Expert told ANI "The FII outflows are at the highest ever absolute number. To dimension this, we have to realise that FII investments in Indian markets are at over 16 per cent of Indian stocks market cap. As such, this outflow represents around 1 per cent of FIIs total, marked to market investments in India".
Bagga further added "On the other hand, the continued strong domestic investor flows into the markets have provided some stability and avoided a sharper correction in the markets".
The October decline, though considerable, pales in comparison to previous major corrections in the Nifty.
For context, during March 2020, when global uncertainty due to the COVID-19 pandemic drove FIIs to sell, the Nifty had plunged roughly 23 per cent in a single month. October's dip is less severe, even though foreign investors' sell-off this time around has reached record values.
The part of this resilience can be attributed to the continued participation of domestic investors. Strong inflows from retail and domestic institutions have helped stabilize the market, softening the impact of FII outflows.
Additionally, primary market activities, including inflows through initial public offerings (IPOs) and follow-on public offerings (FPOs), have brought in approximately Rs 17,000 crore in October, adding further stability to the market.
The significant FII withdrawal highlights the market's evolution and growing domestic investor base, reinforcing the resilience of Indian equities amidst volatile global trends.
