#Foreigners remain net sellers of Indian equities, said James Thom, senior investment director at Abrdn. There has been a rotation out of India and emerging markets stocks into U.S. equities, Thom added.

“Foreigners have been largely absent from the India story in the past year,” he told CNBC.

“It’s a sort of risk-adjusted view that [investors] can get a better, safer return in U.S. equities,” Thom said. “So why take the risk, so-called perceived risk with India?”

India’s economic slowdown also comes at a time when U.S. Treasury yields have been gaining momentum, leading to unprecedented outflows of FPIs, said Rana Gupta, managing director at Manulife Investment Management. Higher Treasury yields tend to take investments away from the stock market as bonds become more attractive.

Profit booking by foreign institutional investors has also pressured India’s equity markets.

“When a market does so well for such a long period of time, there is a lot of profit in the portfolio,” Nilesh Shah, managing director of Kotak Mahindra Asset Management, told CNBC.

“This profit booking by the FPIs is resulting in higher supply at lower prices resulting in bidders dropping their bids, leading to correction,” he added.

Profit booking involves selling a portion of an investment to secure gains after the asset has risen, rather than holding it indefinitely. Traders sometimes engage in profit booking when the stock or asset is believed to be overvalued or have hit a peak.

Some of the foreign portfolio investors who have made large profits in Indian equities are tempted to book more profits looking at higher valuations, Shah added.
#Foreigners