Why Did FPIs Sell ₹25,586 Crore in Indian Shares? Elections, Global Policies, and More – Explained

Foreign portfolio investors (FPIs) have been selling Indian shares since the start of the new fiscal year 2024-25. Several factors, such as the upcoming Lok Sabha elections in 2024, strict policies from global central banks, better performance of Chinese markets, and other global factors, have affected their decisions.

In May, FPIs sold ₹25,586 crore worth of Indian shares, and the total outflow, including debt and other investments, was ₹12,911 crore, according to data from the National Securities Depository Ltd (NSDL). Despite this, there was an inflow of ₹8,761 crore into the debt market in May 2024.


FPI Activity in Indian Markets:

  • In the first week of May, FPIs started buying Indian shares again after selling in April. However, they continued selling in the debt market.
  • In April, FPIs sold ₹8,671 crore worth of Indian shares and ₹10,949 crore in the debt market due to high US bond yields.
  • In March 2024, FPIs invested ₹35,098 crore in Indian shares, the highest inflow in the first three months of 2024.
  • In February 2024, FPIs initially reduced their selling and ended up as net buyers, investing ₹1,539 crore in Indian shares and ₹22,419 crore in the debt market.
  • The inclusion of Indian government bonds in JPMorgan and Bloomberg debt indices boosted foreign investments in the debt market.

Historical Context:

  • In January 2024, FPIs became major sellers after a buying spree in December 2023, which followed three months of selling up to November 2023.
  • In December 2023, strong global signals, such as the US Federal Reserve hinting at the end of its rate hikes and possible rate cuts in March 2024, led to lower US bond yields and increased foreign investments in emerging markets like India.

2023 Overview:

  • Throughout 2023, FPIs bought ₹1.71 lakh crore in Indian shares. Including debt and other investments, the total inflow was ₹2.37 lakh crore.
  • FPIs’ net investment in the Indian debt market was ₹68,663 crore during 2023.

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