FPIs pull out Rs 2,418 crore in first three trading sessions of 2020

Umesh Mehta, head of research at Samco Securities said that "given the massive rally of the previous year, FPIs have started booking profits in 2020. It is likely that they are building up their war-chest to enable buying in huge quantities just before the Budget in February."

Himanshu Srivastava, senior analyst manager research at Morningstar Investment Adviser India, said "there was an apparent cautiousness" among FPIs.

This could be attributed to some of the negative trends such as political issues in India, re-emergence of the trade war between the US and China and the continuing slowdown in the Indian economy. Besides, year-end profit-booking by FPIs could also be one of the factors for relatively low net inflow, he added.

Ajit Mishra, VP research at Religare Broking Ltd, said, "FPIs were net sellers as they booked profits at higher levels. Going forward, if geopolitical tension between US-Iran escalates further, it could restrict FPI flows."

However, in the long term, FPIs remain confident about the Indian markets as they are anticipating positive measures and reforms would continue to aid economic recovery, Mishra added.