Foreign portfolio investors (FPIs) were net sellers of Indian equities in the first fortnight in August, offloading shares worth Rs 21,201 crore. The total investments by them now stand at Rs 14,365 crore, so far this year.
In July, FPIs bought domestic shares worth Rs 32,365 crore while in June, they were net buyers at Rs 26,565 crore after remaining net sellers in April and May, when they sold equities worth Rs 8,671 crore and Rs 25,586 crore, respectively. In February and March they were net buyers at Rs 1,539 crore and Rs 35,098 crore, respectively, after starting the year on a negative note in January when they offloaded shares worth Rs 25,744 crore.
On Friday, foreign institutional investors (FIIs) were net buyers at Rs 766.52 crore while the domestic institutional investors (DIIs) were net buyers at Rs 2,606.18 crore.
A significant trend in the recent FPI flows, which has become more pronounced in August, is the sustained selling by FPIs through the exchange while continuing to invest through the ‘primary market & others’ category, expert V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said.
He attributes the selling trend to the differences in valuations as he said that the primary market issues are at comparatively lower valuations while in the secondary market the valuations continue to remain high. “So FPIs are buying when securities are available at fair valuations and selling when the valuations get stretched in the secondary market,” he added.
“In August till 17th, FPIs have sold equity for Rs 32684 crore through the exchange even while investing Rs 11,483 crore through the primary market & other categories. This trend is likely to continue since India is the most expensive market in the world now and it is rational for FPIs to sell here and move the money to cheaper markets. This picture doesn’t change even if the market turns more bullish on fears regarding US recession receding,” the Geojit analyst said.
“The FPI outflows witnessed on August 24 were primarily driven by a combination of global and domestic factors. Globally, concerns about the unwinding of the Yen carry trade, potential global recession, slowing economic growth, and ongoing geopolitical conflicts led to market volatility and risk aversion. Domestically, after being net buyers in June and July, some FPIs might have chosen to book profits following a strong rally in previous quarters.
Meanwhile, Vipul Bhowar, Director Listed Investments at Waterfield Advisors, sees mixed quarterly earnings and relatively higher valuations to have made Indian equities less attractive. However, he feels that the FPI flows into India should persist given India’s strong economic performance, including GDP growth, reduced fiscal deficit, manageable current account deficit, and strong sector growth and industrial production.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
