ELECTION UNCERTAINTY PROMPTS FPIS TO WITHDRAW RS 25,586 CR FROM INDIAN EQUITIES

Analysts attribute the sell-off to high valuations and weak earnings in financial and IT sectors, political uncertainties, Chinese market appeal, and rising US bond yields driving FPIs towards US bonds

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In May, foreign investors withdrew a substantial Rs 25,586 crore from Indian equities. This significant outflow was primarily attributed to the uncertainty surrounding the general election outcomes and the superior performance of Chinese markets. This withdrawal was notably higher than the net outflow of over Rs 8,700 crore in April, which was driven by concerns over adjustments to India’s tax treaty with Mauritius and the persistent increase in US bond yields.