FPIs turn net sellers in 1st week of 2023 with outflow of ₹5,872 cr from Indian equities

FPIs were broadly net sellers across market instruments. As per NSE data, between January 2-6, FPIs pulled out ₹5,872 crore from equities, while they sold ₹1,240 crore from debt, ₹760 crore from debt-VRR, and ₹36 crore in the hybrid market. Overall, the outflow stood at ₹7,908 crore in Indian markets during the first week of 2023 with equities taking the most beating.

Also, foreign institutional investors (FIIs) were net sellers the entire week. From January 2nd to 6th, FIIs have pulled out ₹7,813.44 crore from Indian equities. On Friday, FIIs outflow was highest in the current week to the tune of ₹2,902.46 crore followed by selloffs of ₹1,449.45 crore and ₹2,620.89 crore on January 5th and January 6th. From January 2-3rd, the outflow was at ₹840.64 crore.

Dr.V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “FPIs have turned sustained sellers in the market. They sold for eleven consecutive days taking the cumulative selling to ₹14,300 crores. And, the money taken out is being invested in the underperformers of last year like China and Europe, which are doing well now. Clearly, FII money is chasing lower valuations by selling in overvalued markets like India.”

During the first week, Sensex and Nifty 50 erased their psychological marks of 60,000 and 18,000 due to extreme volatility. Sensex has tumbled by 1,394 points and Nifty 50 fell by over 373 points from January 4-6th. Markets were in the green from January 2nd to 3rd, however, FOMC minutes, expectations of Q3 earnings, and consistent foreign funds outflow led to Sensex and Nifty 50 giving up their gains and ending the week in the red.

On Friday, Sensex settled at 59,900.37 slipping by 452.90 points or 0.75%, while Nifty 50 ended at 17,859.45 down by 132.70 points or 0.74%.

Vijayakumar further said, “This is the important trend in near-term FPI activity. If this trend continues it might weaken the Indian market further. However, the selling will not be indiscriminate. In December 2022, FPIs bought in capital goods, FMCG, and financial services. Selling was mainly in IT.”

FPIs ended the year 2022 with an outflow of ₹1,21,439 crore in the equities due to macroeconomic uncertainties, rising interest rates trend, and geopolitical tension.

Going ahead, Vijayakumar added, “if the FPI selling continues, it will open up opportunities for investors. FIIs will sell stocks in which they are sitting on profits, like the banking segment. And this segment continues to be strong. Last year, too, selling by FIIs in banks turned out to be opportunities for domestic investors.”

He also said, “globally, the phenomenon of good economic news becoming bad news for markets might continue in the near term. The latest data from the US show increasing job creation and declining jobless claims.”

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