Why FIIs sold out Indian stocks worth ₹2600 crore this month — explained
FII DII data: Despite trend reversal on Dalal Street during Friday deals, foreign institutional investors (FIIs) continued to remain net sellers on Friday last week. The FIIs sold out Indian stocks worth near ₹1500 crore on last session of the week gone by. On 27th October 2023, FIIs sold out Indian stocks to the tune of ₹10,860 crore whereas they bought shares worth ₹9,360 crore on Friday.
As per the FII DII data today, FIIs have remained net sellers in October 2023. They have sold out Indian stocks worth near ₹2,600 crore till 27th October 2023. This FIIs selling in October 2023 is highest since January 2023. In January 2023, FIIs had sold out Indian stocks worth ₹41,464.73 crore. Yet, DIIs have provided full support to the Indian stock market as they have bought shares worth ₹23,437 crore in this month.
Why FIIs are selling Indian shares?
On resons that has fueled FIIs selling on Dalal Street, Omkar Kamtekar, Research Analyst at Bonanza Portfolio said, “The heightened uncertainty surrounding the Israel – Hamas conflict made FII skittish, with reports suggesting Iran and other neighboring countries may get embroiled in this conflict. Crude Oil prices surged in the aftermath of this war to reach near $100 per barrel, adding to the negative sentiment. Additionally, the US bond yield rose above 5 per cent for the first time since the global financial crisis of 2008 making investors pull out from risky assets to bonds and other safe-haven assets. With the Federal Reserve committed to bringing inflation down to the 2 per cent target rate, fears of there could be more interest rate hikes as the US economy continues to show resilience growing much faster than expected.”
Buy or sell: Sumeet Bagadia recommends three stocks to buy next week
Strong US dollar in focus
On how rising US dollar index fuled FIIs’ selling, Sonam Srivastava, Founder and Fund Manager at Wright Research said, “A strong US dollar makes investing in India more expensive for FIIs, prompting them to sell holdings and convert to their home currencies. Global economic slowdown concerns make FIIs more risk-averse, reducing their exposure to emerging markets like India.” Srivastava went on to add that Indian equities’ high valuations compared to other emerging markets is also a reason for intensified selling by FIIs.
“The current trend is influenced by global economic conditions, but FIIs’ long-term investment in India remains positive,” Sonam Srivastava added.
US treasury yields
On how rising US bond yiled infused FIIs selling, Anirudh Garg, Partner and Head of Research at Invasset, PMS said, “The surge in US bond yields has been a major concern. The US 10-year bond yields have reached levels not seen in over a decade, currently standing at 4.98%. This increase is driven by the US Federal Reserve’s actions to combat inflation, making US bonds an attractive option for investors. So, FIIs are shifting their investments towards the US, resulting in reduced exposure to Indian equities.”
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 decision.
“Exciting news! Mint is now on WhatsApp Channels ???? Subscribe today by clicking the link and stay updated with the latest financial insights!” Click here!
Download The Mint News App to get Daily Market Updates.
Updated: 28 Oct 2023, 12:12 PM IST
