FPIs sell Indian equities worth ₹21,200 crore in August
What's the story
Foreign portfolio investors (FPIs) have emerged as net sellers of Indian equities in the first half of this month.
They have sold shares amounting to ₹21,201 crore during this period.
This trend marks a shift from their buying behavior observed in June and July, when they purchased domestic shares worth ₹26,565 crore and ₹32,365 crore respectively.
Investment trend
Investment pattern in Indian equities
The investment behavior of FPIs has seen fluctuations throughout the year.
They began 2024 as net sellers in January, offloading shares worth ₹25,744 crore.
However, they reversed this trend in February and March by buying equities valued at ₹1,539 crore and ₹35,098 crore respectively.
Following a period of selling in April and May where they sold stocks worth ₹8,671 crore and ₹25,586 crore respectively, they returned as net buyers in June and July.
Market shift
Shift to primary market investments
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, has noted a significant trend in recent FPI flows.
He observed that while FPIs have been consistently selling through the exchange in August, they continue to invest in the 'primary market & others' category.
This shift is attributed to differences in valuations between these two markets.
Strategy explanation
FPIs' investment strategy
Vijayakumar explained that primary market issues are at comparatively lower valuations while secondary market valuations 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 said.
He further noted that up to August 17, FPIs have sold equity worth ₹32,684 crore through the exchange while investing ₹11,483 crore in the primary market and other categories.