FPIs sell Indian equities worth ₹58,711 crore in October
In the first eight days of October, Foreign Portfolio Investors (FPIs) sold off Indian equities worth ₹58,711 crore. The massive outflow has wiped out a major chunk of the total inflows for 2024. Consequently, their total investments have now fallen to ₹41,899 crore from ₹1 lakh crore at September's end.
FPIs' investment pattern in Indian equities
In September, FPIs had invested ₹57,724 crore in Indian equities. This was preceded by a lower investment of ₹7,322 crore in August and ₹32,359 crore in July. In June, they were net buyers at ₹26,565 crore after being net sellers in April and May, with sales of ₹8,671 crore and ₹25,586 crore respectively. The year started on a negative note as they sold shares worth ₹25,744 crore in January.
FPIs shift focus to China amid economic stimulus measures
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, observed a trend of "Sell India, Buy China" among FPIs. This shift is due to monetary and fiscal measures introduced by Chinese authorities to boost their slowing economy. He said that "FPI money has been moving to Chinese stocks, which are cheap even now."
Valuation difference between Indian and Chinese indices
Vijayakumar also pointed out the valuation difference between the Hang Seng index and Nifty. The former is trading at a price-to-earnings ratio (P/E) of about 12, while Nifty is trading at a P/E of 23 times estimated FY25 earnings. He expects more money to flow into Chinese stocks due to this huge valuation gap, possibly keeping FPI selling on for some time.
