"Post a strong comeback in 2019 by the FPIs, the year 2020 began on a muted note. This was largely due to increased volatility witnessed in equity markets worldwide due to heightened geopolitical tensions between the USIran. This spooked the investor sentiment and FPIs chose to withdraw money from emerging markets like India," Ajit Mishra, VP Research at Religare Broking Ltd said.
Umesh Mehta, head of research at Samco Securities said conviction of FPIs in the Indian markets seems to be diluting given the rich valuations of large caps, inflationary tendencies, expectation of a larger fiscal deficit along with other economic challenges.
On the future of FPI flows, Ajit Mishra said, "Signs of easing tensions between the US and Iran and positive developments on US-China trade deal front led to renewed buying interest by the FPIs. Going ahead, earnings and upcoming budget would play a critical role in shaping their investment trend.