FPIs sell ₹24,734 cr in Indian equities: Why did they turn net sellers in Jan?
FPIs have sold ₹24,734 crore worth of Indian equities and the total outflow stands at ₹9,663 crore as of January 25, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.
“FPIs continued to be sellers in the cash market having sold equity worth ₹27664 crores through 25th January. FPIs were sellers in autos and auto ancillary, media and entertainment and marginally in IT. They bought in oil and gas, power and selectively in financial services,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Foreign institutional investors (FIIs) also emerged net sellers for all sessions last week with a total divestment of ₹12,194.38 crore, while domestic institutional investors bought for all sessions with a total investment of ₹9,701.46 crore. Market experts also said that the FPI strategy of pushing the market down is not working since their selling is countered with buying by domestic and individual investors.
FPIs turn net sellers: What’s behind the trend reversal?
FPIs snapped their buying streak over global cues as the US bond yields rose from 3.9 per cent to 4.18 per cent, triggering capital outflows from emerging markets such as India, according to market experts.
‘’The rising bond yields in the US is a matter of concern and this has triggered the recent bout of selling in the cash market. The rally in global stock markets was triggered by the Fed pivot which saw the 10-year bond yield falling from five per cent to around 3.8 per cent. Now the 10-year is back at 4.18 per cent which indicates that the Fed rate cut will come only in H2 of 2024,” added Dr. V K Vijayakumar.
FPIs have been buying IT stocks this month after the management commentary following the Q3 results of IT managers indicated optimism of demand revival in the sector, according to analysts.
FPI activity in Indian markets
The inflow intensified last month on strong global cues after the US Federal Reserve signalled the end of its tightening cycle and raised expectations of a rate cut in March 2024. This led to a crash in US bond yields and triggered foreign fund inflows into emerging markets like India.
In December, FPIs were big buyers in financial services and also in IT. FPIs also bought in sectors like autos, capital goods, oil and gas and telecom, according to Dr. V K Vijayakumar.
For the entire calendar year 2023, FPIs bought ₹1.71 lakh crore in Indian equities and the total inflow stands at ₹2.37 lakh crore taking into account debt, hybrid, debt-VRR, and equities, according to NSDL data. FPIs’ net investment in Indian debt market stands at ₹68,663 crore during 2023.
FPI inflows into Indian equities during November 2023 stood at ₹9,001 crore, compared to over ₹39,000 crore worth of shares sold in September and October together, according to NSDL data. Taking into account debt, hybrid, debt-VRR, and equities, FPI inflows were at ₹24,546 crore during the month.
Overall, only four months in 2023–January, February, September, and October- saw net FPI outflows from Indian equities. May, June, and July each recorded FPI inflows above ₹43,800 crore.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Published: 27 Jan 2024, 05:23 PM IST
