FIIs turn net sellers for 16 days in row in Indian stocks with outflow over ₹23,800 cr. What to expect?

Dr.V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, an important trend in the market this month is the sustained selling by FIIs. FIIs sold for the 16th straight trading session taking the total sell figure to ₹23,887 crore.

On Friday, FIIs sold around ₹2,422.39 crore in Indian stocks. While they made their biggest selling so far in the current month on January 11 where the outflow stood at ₹3,208.15 crore. The outflow was at ₹1,662.63 crore on January 12, ₹2,109.34 crore on January 10, and ₹203.13 crore on January 9th. Overall, in the week, the outflow aggregated to ₹9,605.64 crore in Indian equities.

Further, Santosh Meena, Head of Research, Swastika Investmart added, “The FII selling, where they sold approximately ₹10,000 crore in Indian equity markets, was the week’s highlight. Beginning in 2023, we are already observing some correction to the Indian equity market’s notable outperformance in the prior year.”

The last time FIIs were net buyers was on December 22nd of last year. They have been net sellers from December 23, 2022, to date.

Vijaykumar said, “FIIs are selling in India and moving money to cheaper markets like China, Hong Kong, and South Korea where valuations are much lower. In 2022 FIIs were selling in China. This trend has changed to long China and short India.”

Meanwhile, as per NSDL, FPIs outflow in Indian equities is around ₹15,068 crore so far in January. FPIs have been net sellers in other market instruments as well.

According to Vijayakumar, this trend may continue for a few more days. Since DIIs and retail investors are buyers and are keen to buy the dips, the FII selling is unlikely to lead to a sharp correction in the market even though the market appears weak in the near term. CPI inflation falling to 5.72% in December and IIP spurting to 7.1% in November are positive macros that can provide fundamental support to the bulls.

Swastika expert added, “Indian markets are trading lower month-to-date with a significant FII outflow, whereas the majority of emerging markets rebounded in the first few days of 2023 with net FII inflows. The flow of FIIs is therefore a crucial variable in determining the market’s future course. We are not witnessing any abrupt drops, though, as DIIs are working to maintain the market.”

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