FPIs have sold ₹13,047 crore worth of Indian equities and the total inflow stands at ₹134 crore as of January 19, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. FPIs were big players in financial services and information technology (IT), according to analysts.
“There is a sudden change in the strategy of the FPIs starting 17th January. They turned massive sellers in the cash market having sold equity worth ₹24,147 crores in three days from 17th through 19th January,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
FPIs turn net sellers: What’s behind the trend reversal?
FPIs snapped their buying streak over global cues as the US bond yields rose from 3.9 per cent to 4.15 per cent, triggering capital outflows from emerging markets such as India, according to market experts.
‘’It is important to understand that FPIs were big sellers in other emerging markets too like Taiwan, South Korea and Hongkong. Also, since the valuations in India are high, FPIs used the excuse of less-than-expected results from HDFC Bank to press massive sales. FPIs increased their short positions, too,” said Dr. V K Vijayakumar.
HDFC Bank, the heaviest-weighted stock on the indexes, tumbled 8.44 per cent a day after reporting its October-December quarter results – in its biggest one-day slide since May 2020, on worries over its stagnant margins.
The market capitalisation of the stock dropped by nearly over a lakh crore in a single day to ₹11.7 lakh crore. HDFC Bank shares pulled the bank index and overall financial services index down a little over four per cent.
The substantial decline in the stock also predominantly triggered the freefall by equity benchmarks Sensex and Nifty 50 -leading to their biggest single-day percentage loss since June 2022 on January 17, dragged by across the board selling amid weak global cues. The benchmark Sensex tanked 1,628.01 points, or 2.23 per cent, to end at 71,500.76, while the Nifty 50 settled 460.35 points, or 2.09 per cent, lower at 21,571.95.
Market experts also said that the FPI strategy of pushing the market down is not working since their selling is countered with buying by domestic institutional investors (DIIs) and individual investors.
FPIs have been buying IT stocks this month after the management commentary following the Q3 results of IT managers indicated optimism of demand revival in the sector, according to Dr. V K Vijayakumar.
FPI activity in Indian markets
The inflow intensified last month 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.
In December, FPIs were big buyers in financial services and also in IT. FPIs also bought in sectors like autos, capital goods, oil and gas and telecom, according to Dr. V K Vijayakumar.
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: 20 Jan 2024, 06:53 PM IST
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