FPIs sell ₹5,753 cr so far in Feb in equities, appetite rises for debt market

Foreign portfolio investors (FPIs) continued to be net sellers so far in 2023. In just three days of February, the outflow from foreign investors is to the tune of 5,753 crore from equities. In January, the outflow came in at around 28,852 crore. While the equity market records selling pressure, FPIs however have risen for debt instruments. The stock market was jittery in the week that ended on February 3rd owing to foreign funds outflow and free fall in Adani Group’s stocks post Hindenburg allegations and withdrawal of FPO. 

As per NSDL data, FPIs sold 5,753 crore from Indian stocks between February 1st to 3rd. On the other hand, they are net buyers in the debt market with an inflow of 5,502 crore in these three days.

In January, FPIs pulled out 28,852 crore from equities, while they invested 3,531 crore in debt.

So far, year-to-date, FPIs selling in the equity market is approximately 34,605 crore. While the debt market garners an inflow of 9,033 crore.

Dr.V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “The massive FPI selling in Indian markets impacted market sentiments.”

In the cash market, Geojit strategist highlighted that FPIs sold a mammoth 53,887 crore in January and followed up this with 3,212 crore of selling in February so far.

Also, except for the budget day (February 1st), foreign institutional investors (FIIs) were net sellers throughout last week in Indian stocks.

FIIs sold 6,792.80 crore in the equity market on January 30, followed by another selloff of 5,439.64 crore on January 31. However, FIIs were net buyers on the day of the budget 2023 announcement where the inflow came in at 1,785.21 crore. But the sentiment turned bearish yet again on February 2nd and 3rd with an outflow of 3,065.35 crore and 932.44 crore respectively.

Between the January 30th to February 3rd trading sessions, FIIs sold a whopping 14,445.02 crore in Indian equities.

Further, Vijayakumar said, “FPIs are selling in India and buying in cheaper markets like China, Hong Kong, and South Korea where valuations are attractive. This “short India and long other cheaper markets” strategy has led to big underperformance of the Indian market, so far this year. While China, Hong Kong, and South Korea are up by 4.71 %, 7.52 %, and 11.45% respectively YTD India is down by 1.89%.”

He added, “This kind of underperformance is unlikely to last long. FIIs have also been hugely short in the derivatives market. The Budget turned out to be far better than expected. But the market couldn’t hold on to the gains since the Adani stock crisis impacted sentiments. Banking stocks were impacted by fears of Adani exposure impacting banks. But the RBI message that the Indian banking system is healthy improved sentiments leading to a late rally in banking stocks.”

FIIs have sold 2,212.58 crore in equities so far in February. Last month, the outflow was at a massive 41,464.73 crore.

However, despite consistent foreign funds outflow, the stock market closed the week from January 30 to February 3rd on a positive note. 

Last week, Sensex stood in green throughout the period and gained by 1,511 points or 2.55%. On the other hand, Nifty 50 traded on a mixed note however climbed by 250 points or 1.42% overall in the week.

On Friday, Sensex closed at 60,841.88 up by 909.64 points or 1.52%. Nifty 50 zoomed by 243.65 points or 1.38% to end at 17,854.05.


Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. 


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