Question
Which of the following could be the factors that led Foreign Portfolio Investors (FPIs) to withdraw significant funds from Indian equities according to the Economic Survey 2024-25?
1. Slowing earnings growth
2. High valuations
3. Rising geopolitical tensions
The correct answer is
All 1, 2, and 3
The correct answer is: 1, 2 and 3.
Explanation:
According to the Economic Survey 2024-25, multiple factors contributed to Foreign Portfolio Investors (FPIs) pulling funds out of Indian equities:
- Slowing earnings growth: Moderation in corporate earnings reduced the attractiveness of Indian stocks.
- High valuations: Indian equity markets were considered relatively expensive compared to other emerging markets, prompting investors to rebalance portfolios.
- Rising geopolitical tensions: Global uncertainties and geopolitical risks led investors to adopt a cautious approach and shift funds to safer assets.
All three factors collectively influenced FPI outflows from Indian equity markets.
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