FPIs extend Indian equity sell-off amid ‘Trump Trade’ and lofty valuations

Foreign portfolio investors (FPIs) continue to dump Indian equities, with the net outflow in October so far standing at Rs 12,721 crore.

This marks the third consecutive month of outflows by FPIs.

The selling by FPIs has been attributed to a number of factors, including profit-booking after a sharp rally in the Indian market, and the unwinding of the so-called "Trump trade", which saw a surge in inflows into emerging markets after the US presidential election.

In addition, lofty valuations in the Indian market have also made it less attractive for FPIs. The Nifty 50 index is currently trading at a price-to-earnings ratio of over 25, which is higher than the long-term average of around 20.

The Reserve Bank of India (RBI) has also taken steps to curb the inflow of foreign funds into the country, in a bid to stabilise the rupee.

As a result of these factors, FPIs are expected to remain cautious on the Indian market in the near term.

Here are some of the key reasons for the FPI sell-off:

• Profit-booking after a sharp rally in the Indian market
• Unwinding of the "Trump trade"
• Lofty valuations in the Indian market
• RBI measures to curb the inflow of foreign funds

FPIs are expected to remain cautious on the Indian market in the near term.