FPIs offload Indian equities worth ₹22,000 crore in May
Foreign portfolio investors (FPIs) have sold off Indian equities amounting to a net value of ₹22,046 crore in May. This trend continues from April when FPIs sold shares worth ₹8,671 crore. Despite the Nifty reaching an all-time high this week, FPI interest remains low. Analyst V K Vijayakumar from Geojit Financial Services attributes this heavy selling to the significant outperformance of Chinese stocks.
Chinese stocks outperform, triggering FPI shift
Vijayakumar explains that the Hang Seng index, dominated by Chinese 'H' stocks, surged by 7.66% in the last month. This boom was due to foreign institutional investors (FIIs) investing through the Hong Kong market because of restrictions on investing through Shanghai. The valuation of Hang Seng plummeted to a PE multiple of around 9, prompting FII buying and triggering a 'sell India, buy China trade,' according to Vijayakumar.
Election uncertainties influence FPI selling
Vijayakumar also noted that election-related uncertainties could be influencing the FPI selling. He pointed out that news about the decline in voter turnout in the first three phases of voting restrained bullish sentiments. The market's initial assumption of an easy victory for NDA has been challenged, further impacting investor sentiment. However, Vijayakumar believes that FPIs will return to India once clarity emerges on the election front.
