FPIs continue January’s selling streak, offload ₹3,075 crore in Indian equities; buy ₹15,094 crore in debt markets

FPIs have sold ₹3,075 crore worth of Indian equities and the total inflow stands at ₹12,590 crore as of February 9, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.

“The FPI investment trend of selling in equity and buying in debt witnessed in January is continuing in February. Through February 9, FPIs had sold equity for ₹3,074 crore and bought debt worth ₹15,093 crore. This takes the total equity selling in 2024, so far, to ₹28,818 crore and debt buying to ₹34,930 crore,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Also Read: FPIs turn net sellers in January, offload ₹24,734 crore in Indian equities: Why did they snap buying streak?

Foreign institutional investors (FIIs) were buyers for three out of five sessions last week with a total divestment of ₹5,871.45 crore, while domestic institutional investors also bought for three sessions with a total investment of ₹5,325.76 crore, according to stock exchange data.

Why are FPIs selling in equities?

FPIs snapped their buying streak in early January 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.

‘’In the last fortnight of January, FPIs were massive sellers in financials with a sell figure of ₹31,261 crore. This explains the underperformance of Bank Nifty in general and some leading private sector banks in particular. For long-term investors, there is value in banking stocks now,” said Dr. V K Vijayakumar

‘’FPIs were buyers in IT and telecom, which explains the resilience of the leading players in these segments. A reversal of the FPI selling in equity will happen when the US bond yields drift down and stay there for long,” he added.

FPIs ₹2,053 crore in Indian equities, snap January’s selling streak; Will buying continue?”>bought in Indian equities in the first week of February, but have now taken to selling. The main trigger for this divergent trend in equity and debt is the high valuation in the Indian equity market and the rising bond yields in the US, according to Geojit’s Dr. V K Vijayakumar.

Currently, foreign investors are on a risk-off mode, due to the slowdown in the emerging markets economy due to high interest rates, core inflation and above average valuation. Currently, India is undergoing a ripple effect, and this mood is expected to continue in H1CY24, according to market experts.

However, there is a high possibility of improvement in the mood during H2, they added. The degree of improvisation will depend on the level of contraction in interest rate, inflation, budget and pick up in high frequency economy data.

Also Read: Nifty February series outlook: 4 stocks where investors can park their money; do you own?

FPI activity in Indian markets

The inflow intensified in December 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.

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: 10 Feb 2024, 05:23 PM IST