FPI selloff bleeds indices on D-Street, also erodes assets of global funds

The drop in Indian equities since October 1, 2024, has eroded the equity assets under custody (AUC) of most global funds in India, with an average decline of 20%, according to NSDL data.

Funds based in Mauritius and Canada have been the hardest hit, witnessing a sharp 25% drop in AUC. In contrast, Norway-based funds reported the smallest decline, with their AUC falling by 14%.

Meanwhile, funds from other key investment hubs—including the United States, Singapore, Luxembourg, Ireland, the United Kingdom, and Mauritius—each saw their AUC shrink by around 20%.

Foreign portfolio investors (FPIs) have dumped over Rs 3 lakh crore ($36 billion) of Indian shares since October 1, dragging the benchmark Nifty 50 down 11%.

The selloff has hit smaller stocks harder, with the Nifty Midcap 150 sliding 18% and the Nifty Smallcap 150 shedding 22%.

As of February, foreign portfolio investors’ AUC in India had dropped to Rs 62.3 lakh crore ($750 billion), down 20% from Rs 77.9 lakh crore in September 2024. The ratio of India’s market capitalisation to FPIs’ AUC fell to 15.74%, continuing a steady decline since December 2020 amid rising inflows from domestic investors.