FPIs have increased the tempo in the primary market despite continued selling in the secondary market

The Indian primary equity market continued to attract funds from foreign portfolio investors (FPIs) in October, despite their exodus from the secondary market, according to NSDL data. FPIs parked a net $2,361 million (Rs 19,841.9 crore) in the primary market, the highest monthly investment since November 2021 when they invested $3,745 million through this route, including participation in initial public offerings (IPOs) and qualified institutional buyouts. happens QIB). FPIs made a net investment of $10,275.5 million in the primary market in the first 10 months of 2024.

In the secondary market, they sold $13,556.9 million (Rs 1.1 lakh crore) of equity in October, the highest ever monthly outflow, surpassing the sale of $8,126.8 million in March 2020. The increasing attractiveness of Chinese equity amid economic stimulus by the local government has lured FPIs away from Indian equities.

With the mega selloff in October, FPis have sold $9,416.7 million worth of equity in the secondary market so far in 2024. Consequently, the net inflow of FPIs in the primary and secondary market so far for 2024 has declined to $858.9 million compared to $12,054 million at the end of the previous month.

Despite such concentrated selling by FPIs in the secondary market, declines in the benchmark indices were limited to around 6% in October, helped by a sharp improvement in investment by domestic institutions. According to Sebi data, domestic mutual funds invested a record Rs 87,228 crore (over $10.3 billion) in October till the 29th. By 2024, the local funds have already invested Rs. 3.7 lakh crore on a net basis, compared to Rs. 1.7 lakh crore was much ahead of the investment. This in 2022 will be around Rs. 2 lakh crore more than the previous record of investment.