Despite Indian benchmark indices Nifty50 and Sensex gaining over 4% in June, Foreign Portfolio Investors (FPIs) have remained unenthusiastic, offloading Indian equities worth Rs 3,064 crore so far this month. In 2024 year-to-date, FPIs have sold stocks worth Rs 26,428 crore.
This trend continued from May and April, when FPIs sold shares worth Rs 34,257 crore, even as domestic institutional investors (DIIs) remained buyers, supporting the markets.
However, on Friday, foreign portfolio investors/FIIs were net buyers, purchasing shares worth Rs 2,175.86 crore while the domestic institutional investors (DIIs) bought shares worth Rs 655.76 crore.
“The first week of June witnessed massive volatility in FPI flows in response to exit polls and the actual election results. FPIs bought equity worth Rs 6,521 crore on June 3 in response to exit polls. But when the actual results fell far short of what the exit polls indicated, the market crashed on June 4 and FPIs panicked, selling stocks worth Rs 12,259 crore,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Following the roller coaster ride in the market in the first week of June, stability has returned, as indicated by the sharp fall in India VIX from 27 on June 4th to 12.82 on June 14th. “This fall in India VIX indicates the return of stability and a likely consolidation phase in the market,” said Vijayakumar.
Vijayakumar further added.”The resilience of the market and eagerness of retail investors to buy every dip will likely force FPIs to reduce their selling, which was sustained in May. However, if the market continues to rally, FPIs may turn sellers in India and buyers in other markets like Hong Kong, which are very cheap compared to India.”
Earlier in March and February, FPIs were net buyers at Rs 35,098 crore and Rs 1,539 crore, respectively, after selling shares worth Rs 25,744 crore in January. On a net basis, they remain sellers at Rs 26,428 crore so far this year.
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