Foreign Investors Resume Selling Indian Equities in November Amid Global Concerns

Foreign portfolio investors (FPIs) have resumed their selling spree in Indian equities, pulling out a net ₹12,569 crore in the first week of November. This follows a brief pause with an inflow of ₹14,610 crore in October, which had ended consecutive months of outflows amounting to ₹23,885 crore in September, ₹34,990 crore in August, and ₹17,700 crore in July. This renewed selling trend, which has occurred on every trading day this month, is attributed to weak global cues and a prevailing risk-off sentiment in the markets. Experts note that a key factor influencing FPI strategy is the perception of India as an "AI-underperformer" compared to markets like the US, China, South Korea, and Taiwan, which are seen as beneficiaries of the AI-driven rally. However, there is a view that AI-linked valuations are now stretched, and the risk of a bubble in global tech stocks might limit sustained selling in India. If this realization grows and India's earnings growth remains strong, FPIs could potentially turn buyers again. India Inc's Q2 FY26 results have been slightly better than anticipated, particularly in the midcap segment, but global headwinds are expected to keep foreign investors cautious towards riskier assets in the short term. Impact: FPI selling directly impacts market liquidity and sentiment, often leading to price corrections and making it harder for domestic companies to raise capital. The persistent outflows can also cause Indian equities to underperform global peers. The impact on the Indian stock market is significant, estimated at 8/10. Difficult Terms: * **Foreign Portfolio Investors (FPIs)**: Investors from abroad buying Indian financial assets like stocks and bonds without taking control of companies. * **AI**: Artificial Intelligence, technology enabling machines to perform human-like intelligent tasks. * **Risk-off sentiment**: A market mood where investors shift from risky assets (stocks) to safer ones (bonds) due to uncertainty. * **AI-driven rally**: A stock market surge primarily fueled by excitement and investment in Artificial Intelligence technologies. * **Underperformance**: When an investment or market performs worse than its benchmark or other similar markets. * **Q2 FY26 results**: Financial performance report for the second quarter of the Indian fiscal year 2025-2026. * **Midcap segment**: Companies with market capitalization between large-cap and small-cap firms. * **Global headwinds**: Negative external factors that hinder economic or market progress. * **Voluntary Retention Route (VRR)**: A special channel for FPIs to invest in Indian debt markets, requiring a minimum holding period.