FPIs continue selling streak, offload ₹4,768 cr in Indian equities this month

The ₹4,768 crore-figure also includes bulk deals and investment in primary market. Excluding the bulk deals and investment through the primary market, the sell figure in the cash segment rises to ₹9,579 crore, according to analysts.

Why are FPIs net sellers in September

Rising bond yields in the US and strong dollar index are negative for capital flows. This was the primary reason why FPIs turned net sellers in the cash market this month. Strength in the US dollar index and the US 10-year bond yield remaining high are short-term negatives for FPI flows to emerging markets like India, according to analysts.

“Since the market is at record highs and valuations are high FIIs are likely to press sales in the coming days. With high bond yields in the US (the 10-year is at 4.28 per cent) and the dollar index above 105, FIIs are likely to sell more,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

In August, FPIs bought ₹12,262 crore worth of Indian equities and infused a total of ₹18,338 crore as of August 31, compared to its prior three months of sustained buying, according to NSDL data.

FIIs show renewed buying interest; Nifty at record high

Foreign institutional investors (FIIs) shifted gears and invested in Indian equities for the second straight session on Friday, September 15, after domestic equity benchmarks Sensex and Nifty scaled to lifetime highs. The domestic institutional investors (DIIs) were also net buyers and infused ₹1,938.57 crore in Indian stocks.

As per the NSE data, FIIs cumulatively bought ₹33,124.28 crore of Indian equities, while they sold ₹32,959.86 crore — resulting in an inflow of ₹164.42 crore. Domestic equity benchmarks Sensex and Nifty climbed to fresh lifetime highs, propelled by a rally in global markets and renewed foreign capital inflows. Sensex closed at 67,838.63, up 320 points, or 0.47 per cent, while the Nifty settled at 20,192.35, rising 89 points, or 0.44 per cent.

Both indices ended at their fresh closing highs. The Sensex rose for the eleventh straight session, adding 4.64 per cent over the period, logging its longest series of daily gains since October 3, 2007. On the weekly front, the BSE benchmark jumped 1,239.72 points or 1.86 per cent, and the Nifty climbed 372.4 points or 1.87 per cent.

High crude oil prices casts a negative sentiment for markets, however it was offset by robust domestic macroeconomic data and a set of positive global cues. Renewed interest by foreign investors also contributed to the rally.

‘’Even though the FIIs have been sellers in the cash market it didn’t impact the market at all since it was neutralised by DII buying of ₹8,309 crore through September 15. Hyper activity by retail investors is also contributing to the bullishness in the market,” said Dr. V K Vijayakumar.

‘’The ongoing market rally has taken the Nifty to rich valuations. At the current level, Nifty is trading at above 20 times estimated FY earnings. The valuations in the mid-and small-cap space are becoming excessive. Investors have to be cautious,” he added.

However, analysts reckon that even though the undercurrent of the market is bullish the high valuations and new risks like surging crude and rising dollar index can impact the market negatively. Brent crude at $94 is a major macro worry which the market cannot ignore for long.

‘’The rising dollar index which has breached 105 and the attractive US bond yields (10-year at 4.28 per cent) will force the FIIs to sell aggressively soon,” said Dr. V K Vijayakumar.

Updated: 16 Sep 2023, 04:46 PM IST