FPIs' January Exodus: When Dollars Bid Adieu to Dalal Street
Well, isn't this déjà vu with a fresh calendar year? Our friends, the Foreign Portfolio Investors, seem to be treating Indian equities like that gym membership they bought but never used. Another month, another multi-crore withdrawal – clearly, their New Year's resolution was 'less India, more, well, anywhere else with shinier yields.' It’s almost as if they hear 'rising US bond yields' and immediately start packing their bags, leaving us to ponder if our market is just a temporary stopover in their global itinerary.
This significant outflow, totaling over Rs 22,530 crore (a hefty USD 2.5 billion) from Indian equities in January alone, marks a continuation of the selling trend witnessed throughout the previous year. The primary drivers behind this persistent divestment are the escalating US bond yields, which make dollar-denominated assets more attractive, and a strengthening US dollar, further eroding the appeal of emerging market investments. These macro-economic shifts encourage foreign investors to reallocate capital towards safer, higher-yielding opportunities back home or in developed markets.
