Banks contagion fears make FPIs net sellers this week, inflow trims to ₹11,495 cr in equities
Foreign portfolio investors (FPIs) inflows in the Indian market which were driven by Adani Group’s block deal in the initial stages of March have been offset by foreign banks’ contagion fears. Silicon Valley Bank and Signature Bank collapsed coupled with a liquidity crisis in other US and European lenders dampened the mood of investors globally. Indian equities also suffered the brunt. In the week between March 13 to 17th, Sensex and Nifty 50 tumbled by nearly 2%. And inflows of FPIs have reduced due to this week’s selloffs.
As per NSDL data, FPIs inflow stood at ₹11,495 crore in the Indian equities so far in the current month, till March 18.
In the previous week that ended on March 10th, FPIs inflow stood at ₹13,540 crore, NSDL data. This was due to a mega block deal of ₹15,446 crore in four Adani companies.
That being said, FPIs inflow has reduced by ₹2,045 crore during the trading sessions of March 13 to 17th.
Domestic equities started the week that ended on March 17 in red due to banks’ contagion fear after the collapse of Silicon Valley Bank and Signature Bank but eased in the last two trading sessions as some liquidity lifeline was given to lenders like Credit Suisse and First Republic Bank which calmed the panic selling. Also, better-than-expected inflation data contributed to lifting sentiment. However, consistent foreign funds outflow capped the gains.
Accordingly, this week, Sensex plunged by 1,145.23 points or 1.93%, and the Nifty 50 dipped by 312.85 points or 1.8%.
Talking about FPIs’ performance, Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “FPIs have invested a total amount of ₹11344 crores till 18th March. This includes the bulk investment of ₹15446 crores by GQG in Adani stocks. So, net of the bulk deals the FPI is negative.”
Meanwhile, foreign institutional investors (FPIs) were net sellers throughout the latest week. They sold ₹7,953.68 crore from March 13 to 17th.
Vijayakumar highlighted that for 2023, so far, FPIs have sold equity for ₹23283 crores (NSDL). FPIs have been consistent buyers only of capital goods. In financial services, they have been alternating between buying and selling on different fortnights.
He added, “since risk-off is the dominant market mood now following the bank failures in the US and fears of contagion, FPIs are unlikely to turn buyers in the near term.”
Year-to-date, FPIs inflow in Indian equities stands at ₹22,651 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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Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.