The exodus of foreign investors from Indian equity markets continued unabated last week. Foreign portfolio investors (FPIs) withdrew nearly Rs 20,000 crore in the last five trading sessions.

FPIs sold due to the high valuation of domestic stocks and shifted their allocation to China. As such, FPIs have become net sellers in the equity market so far in 2024, and have withdrawn a total of Rs 13,401 crore. FPI selling is expected to continue in the coming times. If the third quarter results and key indicators indicate improvement in earnings, this scenario may change and FPIs may reduce selling.

Sunil Damania, Chief Investment Officer, MozoPMS, said that the newly elected President in the US will take office in January 2025. Therefore, the Indian market will be affected by the results of Maharashtra assembly elections, corporate earnings, and the attitude of retail investors in the near term.

According to the data, FPIs have made a net sale of Rs 19,994 crore so far this month. Earlier in October, they had made a net withdrawal of Rs 94,017 crore. This was the highest-ever sale by FPIs.

Foreign investors had invested Rs 57,724 crore in September 2024. One of the major reasons for FPIs exiting Indian equities is their new attraction towards China. They believe that China's valuation is attractive at this time. Himanshu Srivastava, joint director, of Morningstar Investment Research India, said that China has recently taken several measures to revive its slowing economy and attract foreign investment.