FPIs offload ₹13,400cr in Indian equities after 2-month buying spree
What's the story
Foreign portfolio investors (FPIs) have shifted their stance on Indian equities this month, transitioning from net buyers to net sellers. This change marks the end of a two-month buying spree that spanned June and July. Data from the National Securities Depository Ltd (NSDL) reveals that FPIs have offloaded ₹13,431 crore worth of Indian equities in August as of now.
Investment details
Net investment stands at ₹7,044 crore
Despite the sell-off in equities, net investment from FPIs across various asset classes including debt, hybrid, debt-VRR, and equities remained positive. As of August 9, this figure stood at ₹7,044 crore. The shift in FPIs' approach toward Indian equities coincides with the start of the new fiscal year 2024-25 (FY25).
Market impact
Global stock market correction influences strategy
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, has linked the change in FPIs's investment strategy to a global stock market correction. He noted that foreign institutional investors (FIIs) sold off ₹19,544 crore in the cash market within the first four days of last week. However, they resumed buying on Friday when markets stabilized but only purchased a limited amount of ₹406 crore.
Sector influence
Investment trends impact financial services sector
Geojit's market experts have observed that FIIs were consistent sellers in the financial services sector for the fortnight ending on July 31. This trend may partly explain the current weakness in this segment. During this same period, FIIs showed interest in other sectors such as IT, autos, metals, and capital goods by increasing their investments.
Market resilience
Indian markets display resilience amid global uncertainties
Despite global uncertainties impacting markets worldwide, Indian markets have demonstrated remarkable resilience. Alok Agarwal, Head - Quant & Fund Manager at Alchemy Capital Management, attributes this to India's strong economic growth, effective monetary policy by the central bank, and record inflows from retail investors. He also noted that domestic funds are confident in India's long-term growth potential driven by sectors such as manufacturing, pharmaceuticals, and renewable energy.